The United States is committed to strengthening
democratic institutions, promoting prosperity, investing
in people and bolstering security in Latin America -- and
the U.S. Department of State is employing its diplomatic
tools to pursue these ends, says Assistant Secretary of
State for Western Hemisphere Affairs Roger Noriega.
In July 27 testimony before the House Committee
on International Relations' Subcommittee on the Western
Hemisphere, Noriega said that the United States is willing
to work with all nations throughout the Americas interested
in strengthening their political institutions and implementing
economic reforms to take advantage of trade opportunities.
Noriega cited several examples of U.S. diplomatic
challenges in the region, including the establishment of
a free-trade agreement with Central America and the Dominican
Republic (known as CAFTA-DR) and supporting Colombia's efforts
to confront terrorism and the illegal narcotics trade.
During his testimony, Noriega also discussed
recent U.S. economic diplomacy in Uruguay.
Whereas U.S. efforts to confront diplomatic
challenges may not yield the desired results in the short
term, the United States is determined to stay the course
in spreading freedom and prosperity in the region, he said.
Following is the Uruguay segment of Noriega's
remarks, as prepared for delivery:
Uruguay had a solid record of market-oriented
economic policies in 2002 when the financial crisis in Argentina
directly contributed to a bank run. The Treasury Department
maintained close contact with the Uruguayan government and
IMF officials during the first half of 2002, tracking the
decline in deposits and assisting in formulation of a response
to it. Initially, Uruguay drew on its existing IMF program,
and a new IMF program was launched in March and augmented
in June. When it became clear in early summer that these
measures would not be sufficient to bolster public confidence,
Treasury began a series of intensive meetings with Uruguayan
and IMF officials to develop a strategy for addressing the
bank run decisively.
As a result, the United States joined with
the IMF in supporting the government of Uruguay's plan to
fully back dollar checking and savings deposits while reprogramming
dollar time deposits. The deposit guarantee plan was financed
with additional funds from the IMF, World Bank and Inter-American
Development Bank. The government of Uruguay also determined
that it would suspend the operations of four private domestic
banks. To assist the banking system until the multilateral
assistance could be disbursed, the U.S. Treasury provided
a short-term $1.5 billion loan to the government of Uruguay.
The loan was repaid within one week.
These interventions -- the result of sustained
close coordination between the Treasury Department, IMF,
the State Department, our embassy in Montevideo and Uruguayan
officials -- combined with fiscally responsible policies
of the government of Uruguay helped the country avert a
possible collapse of its banking system and default. In
2004, two years after the onset of the financial crisis
and one year after a successful debt restructuring, Uruguay
enjoyed real GDP growth of 12.3 percent.
See related article
for the complete text of Noriega's remarks.