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DDI Speech 10/26/96

An Intelligence Perspective on Latin America's Renewal
An Address by DDI John Gannon
Before the Central Intelligence Retirees Association
Clearwater Beach, Florida
26 October 1996

Good evening. I am delighted to be with you tonight. I confess that I leap at any chance to get outside the beltway, and Clearwater is as good a field trip as a government worker can hope to get.

But I also must tell you that I take special pleasure in meeting with Agency retirees¾this is my fourth such encounter in the past year. Your generation of intelligence officers achieved more in the defense of freedom than any of your forebears anywhere in the world at any time in history. Rubbing shoulders with you is, to say the least, energizing for those of us trying to carry on the traditions of a demanding but unheralded profession that you made honorable and indispensable to the preservation of our great democracy.

And, let's face it, you retirees always manage to recover that sense of humor and perspective that you lost in your last couple of assignments at Headquarters. I assure you that you throw much better parties than the crowd you left behind in Langley. And, as always when I mix it up with Agency veterans, I will go home encouraged by how deeply you all still care about CIA¾its challenging future as well as its heroic past.

I am CIA's Deputy Director for Intelligence, which I'm sure many of you will recall, was Jack Ryan's job. Tom Clancy's Clear and Present Danger paints DDI Ryan as an ingenious, hard-charging, patriotic, devoted husband and father who can drive a Chevy Suburban 50 miles per hour in reverse through the narrow alleyways of Bogota while dodging rocket-propelled grenades. You recall that spectacular scene where the Colombians turn over to Jack a million-dollar helicopter after he simply flashes his CIA business card. Okay, okay, this is a bit of a stretch¾but please don't tell my kids.

On a professional level, of course, separating fact from fiction is at the core of our mission as intelligence officers.

I'd like to spend the next few minutes describing our effort on Latin America and the Caribbean. I don't need to tell you how this region figures prominently in the life of this state. What's less obvious is how Latin America is a touchstone for new directions in the CIA mission.

To start off, let me be clear about the messages I want to leave with you tonight.

A Changing Region
Latin American and Caribbean nations are undergoing rapid and fundamental change on many fronts. For decades, there was an all-too-familiar pattern in Latin America of "revolving door" governments. With each new government came the promise of a better future. Latin American countries collectively have had 253 constitutions since independence, an average of more than 12 apiece.

More often than not, military chieftains rather than constitutions guided the ship of state. As recently as the early- to-middle 1980s, the military still ruled in Brazil, Argentina, Chile, Uruguay, and Paraguay. Parliaments held little sway, and the courts had little or no independence. Fewer than 1 in 10 Latin Americans lived under democratic rule.

The 1980s were a watershed for Latin America. Military rule lost whatever appeal it might have had when the generals proved unable to deal with economic hardships brought on by the international debt crisis. Populism and old-style patronage politics proved too expensive for most governments to sustain. Marxism lost its appeal as the Soviet empire crumbled. With the old ways discredited, democracy came to the fore.

In Latin America today we see proof of Churchill's adage "Democracy is the worst system devised by wit of man, except for all the others." Democracy is the watchword throughout Latin America, and every sovereign nation but one enjoys civilian, constitutional government. The glaring exception is of course Cuba. But apart from Fidel Castro, Latin Americans seem determined to ride the democratic wave into the future. The Southern Cone Common Market, or MERCOSUR, recently made duly elected government a mandatory requirement for membership.

The region still has more than its share of political crises, but no longer do they portend national calamity. In 1992 a corruption scandal led Brazil's elected President Collor to resign. For many the incident evoked disturbing parallels to 1961, when the resignation of another Brazilian president¾Janio Quadros¾ushered in a prolonged period of political instability capped by military takeover. But this time the system worked and democracy remained intact. Likewise in Venezuela, corruption charges led to the removal of President Carlos Andres Perez in 1994. But here again, a constitutional successor took over and finished the unexpired term.

Along with the drive for democracy in Latin America, we see a strong push toward market economics. Some of you have heard the refrain that Brazil "is the land of the future . . . and always be." Well, Brazilians today behave as if the future has arrived, just as many other countries in the region are taking bold steps to build a more prosperous future.

Across the region, budgets have been trimmed, markets liberalized, and regulations lifted. Net foreign investment in the region has increased nearly sixfold from the low point of the 1980s. With this new money has come a surge in output and exports. Today, you can wear high-quality wool suits from Mexico or the latest Paris fashions produced in Central America. You might have flown into Clearwater on a Brazilian-made commuter aircraft.

As a natural trade partner, the US stands to benefit from Latin America's resurgence. Between 1993 and 1995, US merchandise exports to the region grew by 22 percent, to an estimated $95 billion. This year, US exports could reach $105 billion. To put this in perspective, our exports to Europe for last year were $130 billion. Latin America could well overtake the European market for US exports in the next few years.

History teaches us that democracy and regional economic development help undergird regional peace and stability. Increasingly, we see mutual suspicion and distrust among Latin American nations giving way to unprecedented defense and security cooperation. The most notable exception is Peru and Ecuador, which last year clashed over a border dispute. But even here, fighting has given way to diplomacy, and the US is an important part of a multilateral effort to arrive, finally, at a solution.

The Intelligence Agenda
If you add up these three key factors¾politics, economics, and security¾the conclusion is that Latin America has experienced a remarkable, even historic, shift. But it would be premature to conclude that Latin America is on an easy glide path toward a more democratic, peaceful, and prosperous future. Economic pressures are bound to test still-fragile political institutions.

Poverty remains widespread, as economic reforms have provided opportunities for the better-off, while hurting those at the lower end of the scale. In most countries, the gap between rich and poor is wider now than before the debt crisis of the 1980s. The bottom fifth of Latin America's population receives less than 5 percent of total income. These gross disparities, if left unaddressed, will fuel social tensions and threaten to undermine political and economic progress across the region, even in countries like Argentina, Brazil, and Chile.

The problems of poverty and income disparity are most visible in Latin America's urban areas. Seventy-five percent of all Latin Americans live in cities and towns. Four of the world's largest cities¾Mexico City, Sao Paulo, Rio de Janeiro, and Buenos Aires¾are in Latin America. No one can predict with certainty the full range of consequences that come from packing 30 million people in a single urban area. But that's what the Mexican Government will have to deal with in its capital city by the end of the decade.

I can assure you that, in the case of Mexico, CIA will work hard to understand the consequences. The Mexican leader Porfirio Diaz remarked almost a century ago, "Poor Mexico, so far from God and so near the United States." Diaz understood better than most US citizens that US interests are broadly engaged in Mexico. The US simply cannot afford to ignore developments inside Mexico.

Mexico is a focal point for many major issues, including counternarcotics, economic security, corruption, and alien smuggling. The emergence of the Zapatista rebel forces and, more recently, the Marxist-oriented Popular Revolutionary Army underlines the serious political, economic, and social tensions in Mexico. Given the importance of Mexico to the US¾in terms of trade, investment, and both legal and illegal immigration¾tracking developments in that country will remain a high-priority task for the Intelligence Community.

Cuba, of course, will be another high priority. Fidel Castro, now 70 years old, has outlasted 13 DDIs, so I'm not going to predict political collapse tonight. It's true that there is widespread discontent inside Cuba and the Cuban economy is a shambles. That is, unless you count the makeshift production of spare parts for 1940s-vintage Chevrolets, which by all accounts is thriving.

More important for Castro is Havana's military and security apparatus, which remains formidable. The shootdown last February of two civilian aircraft piloted by Cuban Americans¾in international airspace¾suggests that Castro will deal forcefully with any activity that Havana defines as a threat.

With Haiti, the DI has made a major commitment to monitor developments and provide timely warning of threats to US personnel on the ground. Good intelligence helped policymakers make informed decisions that led to the restoration of exiled President Aristide two years ago and the peaceful transition to an elected successor last February for the first time in the country's 192-year history.

The Narcotics Angle
Intelligence will continue to play an important role in helping formulate and implement US counternarcotic policy. We work closer than ever with the Drug Enforcement Administration and with the FBI on international organized crime. Let me emphasize that our role is not something that we dreamed up after the fall of the Berlin Wall. As many of you know firsthand, our support to the antidrug effort dates back more than two decades, and it has emerged as a key element of our overall mission.

In today's tough budget environment, we can't afford to behave like J. Edgar Hoover's aides at FBI who¾as legend has it¾once sent their boss a memorandum with margins too small for his liking. In big red letters Hoover scrawled an angry warning across the top: "Watch the borders!" The next morning his frightened staff transferred 200 FBI agents to Canada and Mexico.

We don't have the luxury of moving people and resources on a whim. We need to target our effort where we can make a real contribution. On the analytical side, we have taken a leading role in providing all-source analysis of the global narcotics threat. Just as we once put our energy into estimating the Soviet grain crop, today we draw upon satellite and aerial photography to develop worldwide production estimates for coca and opium.

The bad news is that imagery-based crop estimates for 1995 indicate that, even with aggressive coca eradication programs in Bolivia and Colombia, Andean coca leaf cultivation reached a record high of more than 300,000 metric tons, enough to produce almost 800 metric tons of cocaine. Latin America is also a major source of marijuana and methampthetamine. And though it produces just a fraction of the world's opium poppy, it represents an increasing source of heroin for the Western Hemisphere.

CIA is doing more than tracking production, Our advanced technical systems and human sources of foreign intelligence play a key role in identifying structures, networks, and vulnerabilities of major trafficking organizations. The objective is to provide "actionable" intelligence to support the US policy process, to bolster the capabilities and resolve of drug countries to work against traffickers, and to assist interdiction and law enforcement efforts.

On this latter point, we place a premium on ensuring that our foreign intelligence priorities are aligned closely with enforcement efforts here in the United States. And foreign intelligence has often provided law enforcement agencies with leads that are used for investigative purposes.

Our efforts have yielded important results. Indeed, intelligence has helped fundamentally alter the nature of drug activity in Latin America.

We have no illusions that these successes will be permanent. There is already evidence of the "balloon effect" as the squeeze on the Cali mafia has led drug traffickers in Bolivia and Peru to expand their share of the cocaine market. Mexican drug lords are also vying for new business. And cocaine traffickers denied the Andean Airbridge have turned to fastboats and other means of riverine transport. As competition grows, the traffickers are also using more sophisticated computer and encryption technology to protect and enhance their operations.

Clearly, there are tough challenges ahead for intelligence and law enforcement. The stakes are extremely high¾not just for the United States but also for the Latin American nations¾which brings me back to my original argument about Latin America's political and economic turnaround.

Drug traffickers have the will and capacity to corrupt political and economic systems. Drug money has the potential to overwhelm local army, police, judges, and political parties. And the threat increases when the traffickers forge links to insurgent and criminal groups. Against this backdrop, there is the potential that public support for national institutions and reforms will erode, thus threatening to undermine the positive trends underway in Latin America.

So, I want to leave you with a cautionary note: Peace and security in Latin America and elsewhere cannot be taken for granted. The fact is that we live in a safer world today in part because the extraordinary efforts of men and women like you.

In order to preserve your legacy, we must have a clear-eyed recognition of enduring challenges and new threats. And me must be able to outsmart our adversaries and anticipate their next step. I can assure you that the DI, working alongside our colleagues in the DO and others in the Intelligence Community, is ready to meet these challenges, to safeguard the present, and to ensure a better future.

I'll end my formal remarks here. I'd be glad to take any questions you have on any issue or take back to Headquarters any message you may want to deliver.

Thank you very much.