Mr. Chairman and Members of the Committee: Thank you for the invitation to testify today. I appreciate and welcome the opportunity to share what the U.S. Agency for International Development is doing to advance prosperity and security in the Americas, and I am eager to hear your advice and counsel as well.

It is also an honor to testify with my colleagues Assistant Secretary Arturo Valenzuela, Deputy Assistant Secretary Frank Mora, and President Robert Kaplan. As a college student, I read Dr. Valenzuela's work on political development in the Americas. He helped shape my thinking then, and I cannot think of a more accomplished diplomat to frame the policy environment within which USAID operates in the hemisphere today.

Mr. Chairman, during my four months on the job, I have had the benefit of meeting with you, other Members of Congress and your staffs to discuss development challenges and opportunities in the Americas. Your ideas have enriched my thinking, and have already improved USAID's strategic and programmatic approach in Latin America and the Caribbean.

I have also been heartened by the bipartisan expressions of support for USAID's work in the Americas. There is widespread recognition about how the agency's investments advance our national interest. USAID's work is not charity. Our programs may reflect the generosity of the American people, but they are not only from the American people, as the agency's motto says; they are for the American people.

When we help stabilize and grow economies closely tied to our own, we help develop markets for our products. When we help farmers in coca producing areas of Colombia harvest legal crops or steer vulnerable youth in Central America toward constructive endeavors, we help to stem the flow of drugs to our communities. When we reduce deforestation in the Amazon, we help stabilize rainfall cycles for farmers in our country. And when we reduce the prevalence of disease in the Americas, we help keep our communities healthy.

President Obama's upcoming visit to Brazil, Chile and El Salvador underscores that amidst competing global priorities and challenges, the Americas remain a vital strategic partner for the United States.

The President's trip comes at a most propitious time. The hemisphere is more prosperous, more democratic and more independent today than ever before. Sound financial management has helped spur several years of robust economic growth. Thanks to greater access to education and innovative social programs, poverty has declined and income inequality narrowed in many countries. Citizens are better organized and governments more responsive to their needs.

Despite this progress, few countries in Latin America and the Caribbean are poised to be classified as "developed". Poverty rates in Latin America and the Caribbean remain high, with millions working outside the formal economy and denied access to credit. Many economies are characterized by a lack of diversification and low productivity. Crime rates have reached frightening levels, overwhelming ill-equipped judicial bodies. Schools are failing to prepare students for modern job opportunities. Governments are not collecting the revenues they need to provide essential services, rendering weak state institutions even more ineffective. Climate change is posing new economic threats. And some countries are even regressing politically, as governments impose new restrictions on political activity.

Although many of these challenges are not new, we are better positioned than ever to make progress on them. As governments and civil society have advanced, they have become better development partners for the United States. At the same time, USAID, under the energetic leadership of Administrator Raj Shah, is implementing innovative approaches to development, based on lessons learned from around the world. These two dynamics - a more mature hemisphere and a more modern and effective development approach - present the United States and our neighbors with an historic opportunity to make sustainable development gains that will leave citizens throughout the Americas better off. Our overriding goal in Latin America and the Caribbean is to strengthen the capacity of governments, civil society and the private sector to expand economic opportunity, strengthen democratic governance and improve citizen security.

The hallmark of the Obama Administration's approach to development is sustainability. Of all the metrics we use to gauge our success, none is more important than reaching the point at which we can close up shop in a country. As President Obama said when he announced his new development policy in September, the purpose of development "is creating the conditions where our assistance is no longer needed."

There are a number of steps USAID is taking to achieve that objective. First, we are accelerating the shift from being an agency that provides aid to one that builds the capacity of countries to provide for themselves. We are donating less food and putting greater emphasis on helping farmers to increase agricultural production and access markets. Those changes are already evident in Haiti and Central America, where farmers we are assisting have experienced rising incomes.

Similarly, we will continue to provide life-saving medical care, where needed, but we are placing a greater emphasis on improving the capacity of governments to manage their own health systems and provide affordable and high-quality care for their citizens. In Paraguay and Guatemala, for example, we are supporting the Ministry of Health's efforts to broaden the reach and efficiency of the country's medicine supply system.

As school attendance rates have risen in recent years, we are emphasizing the improvement of education quality. In Jamaica, for example, we are supporting the government's efforts to increase early grade literacy and the acquisition of math skills.

We are also dedicating fewer resources for one-time elections and more to enhance the capacity of government agencies to provide essential services. That means not just strengthening Congresses and municipalities, but helping Ministries of Health to guarantee high-quality, affordable care and Ministries of Education to ensure that children are being prepared for 21st century jobs.

Second, to strengthen institutions abroad, we are channeling resources more directly through governments, local NGOs and the private sector. We will continue to use outside contractors where appropriate, but will direct more assistance to local entities in order to strengthen them and reduce dependence on outside assistance. In Peru, for example, we are providing direct assistance to the national counterdrug agency and municipal governments to develop economic alternatives for former coca growers. In the coming weeks, we plan to give every USAID mission in the hemisphere a target for the share of its program portfolio to be channeled through organizations in their host countries.

Third, we are increasingly collaborating with businesses. Long-term development and job creation depend upon an active and vibrant private sector. By partnering with private companies, we not only leverage resources; we create durable enterprises that will provide long-term development dividends. For example, spurred on by an incentive fund created by USAID and the Gates Foundation, the telecommunications company Digicel introduced a mobile banking service that will provide any Haitian with a cell phone with access to financial services. When we partner with private companies on initiatives like that, we achieve the development hat trick. We save money and advance our development objectives; firms gain access to markets and sources of supplies; and the poor improve their livelihoods.

In order to achieve our sustainable development objectives, we are also consolidating resources in priority countries and sectors. We are guided by President Obama's pledge at the United Nations to "focus our efforts where we have the best partners and where we can have the greatest impact." For USAID, that will mean operating in fewer countries; in each country working in fewer sectors; and in each sector, implementing fewer programs. In Latin America and the Caribbean, we are closing two missions. In recognition of the gains that Panama has made since we reopened our office there in 1990, we will be closing the mission and winding down our programming. And in a cost-saving measure, we plan to manage our Guyana projects from one of our regional offices. Steps like these will enable us to shift program resources and staff to countries where the need is greatest and where we are confident we have strong partners to achieve our development goals.

We are also reducing our work in some sectors in Latin America and the Caribbean, such as family planning. We will continue to look for smart ways to exit other sectors, as well as other countries, and revisit our portfolio of programs to make sure we are utilizing our resources in the most effective way possible.

In the field of development, where there is so much need, determining funding priorities is a challenge, and I can understand why a decrease in funding in any area might be disappointing. The question is not whether help is needed in a given area, because the response would almost always be an unequivocal yes. Rather, the question is where can the United States Government best leverage our scarce resources and most effectively deploy our range of agencies to have a transformative and lasting impact.

As countries reach a point when they no longer need our assistance, we will actively recruit them to work with USAID as a fellow donor. We are already working with countries like Brazil and Chile, which have valuable lessons to share from their recent successes in achieving broad-based economic growth. We are looking to expand upon those arrangements and form new ones.

Such partnerships will be especially important in dealing with development issues that respect no borders and require a coordinated, multinational response. In Latin America and the Caribbean, USAID is confronting two transnational threats in particular. The first is the escalating gang activity and drug trafficking.

Areas of Mexico, Central America and the Caribbean are suffering from the highest rates of non-political violence in the world. In some countries in the region, murder rates are nearly 10 times higher than in the United States. As regional leaders develop strategies to counter the crime wave, it is in our interest to support their efforts. In an increasingly globalized world, organized crime, like disease and environmental degradation, penetrates borders. The flow of drugs through the Caribbean and Central America often continues into this country, harming our youth and sapping strength and resources from our communities.

The lack of security also threatens to undermine all our other development work in the region. Crime is discouraging business investment and diverting public and private resources that could otherwise be used for more productive investments. Organized crime is corroding state institutions, undermining faith in democracy. Drug trafficking organizations have a greater presence in some areas than the government. Given the primacy of improving the security environment, we plan to channel as much of our resources in the region as possible to promote security and reduce the influence of organized crime. The President's 2012 foreign assistance request for the Western Hemisphere reflects the importance of programs that advance the common security interests of the United States and our neighbors.

Beyond our self-interest in helping to combat organized crime and drug trafficking, we have an obligation to do so along our southern border. As Secretary Clinton has noted, the demand for drugs in the United States drives much of the illicit trade, while guns purchased in the United States are used in violent crimes in Mexico and other neighboring countries. USAID programs are an integral part of President Obama's National Drug Control Strategy and its goals to significantly reduce drug use and its consequences in the United States by 2015.

The Obama Administration is deepening President Bush's constructive Merida Initiative to combat crime in Mexico and Central America and expanding the effort into the Caribbean. USAID is continuing our longstanding work to strengthen the capacity of judicial systems to fairly and effectively provide justice; but the heart of our work now involves supporting preventive anti-crime measures, namely providing youth vulnerable to the lure of crime with positive and productive alternatives. That means creating safe urban spaces, providing job training, and engaging in concerted efforts to keep children in school.

As Mexico, Central America, and the Caribbean are mostly transit points for the movement of drugs, we also continue to work with drug-producing countries to cut off the source. In Colombia, USAID has helped reduce coca production by as much as 85 percent in the geographic areas where we collaborated with the government and local communities. Today, thousands of farmers in Colombia who once cultivated coca are now growing legal crops, thanks to USAID assistance. Where guerrilla groups and drug trafficking organizations once operated with impunity in ungoverned terrain, peace is returning and civilian agencies of the state are arriving to provide services.

As countries deal with crime's debilitating impact on development, another emerging issue - one with truly transnational impact - looms large for the region's economies: global climate change. The increase in average temperatures, changes in rainfall patterns, rising sea levels, glacier melts and extreme weather patterns linked to climate change are predicted to have an adverse economic impact on an already vulnerable region. Many of the region's key economic activities, such as agricultural production in Central and South America and tourism in the Caribbean, are acutely sensitive to climate change. Added to this is the strain on national budgets when droughts, heavy flooding or powerful hurricanes siphon off scare resources to finance disaster relief and recovery efforts.

Through the Obama Administration's Global Climate Change Initiative, we are responding to this threat by strengthening the capacity of communities and governments in Central and South America to improve land-use management to minimize deforestation, a principal source of emissions in Latin America. We are also working with the small island nations of the Caribbean to develop adaptation plans to protect critical industries and resources. And we are exploring partnerships with the private sector to devise creative ways to mitigate the economic costs of catastrophic events like hurricanes and flooding.

Many of these challenges may seem daunting, but the United States is fortunate to have an impressive set of institutional partners to work with. Unfortunately, we cannot always work as closely with all governments in the region as we would like. Nevertheless, even in some of the more politically challenging settings, we have been able to identify particular ministries and officials eager to work with us to advance common objectives. And when that is not feasible, we are often able to collaborate with capable NGOs.

In some countries, our objectives are more elemental. While the hemisphere has experienced impressive democratic gains in recent years, there has been a narrowing of political space in some countries and unrelenting repression in another. Freedom House reports that 10 countries in Latin America and the Caribbean are only "partly free", with political rights and civil liberties decreasing in six countries in the past two years. Governments fearful of their own people are restricting the rights of individuals, the media, civic organizations and political parties.

Autocratic governments might try to make it more difficult to work in solidarity with citizens struggling to exercise basic human rights, like freedom of expression and freedom to assemble. But the United States will not yield in our support for those who want to enjoy universally recognized human rights.

Mr. Chairman, the many development challenges I have discussed today converge in one form or another in Haiti, USAID's highest development priority in the hemisphere. As we move into the second year of post-earthquake recovery and reconstruction, we are already implementing our new approach to development. We are partnering successfully with Haitian government institutions to respond to the cholera epidemic; address security; and boost the economy. We are ramping up our partnerships with the private sector to generate jobs and benefit from innovative approaches to tackling development challenges, like the mobile banking initiative. And we are including the Haitian people in the reconstruction effort. As contracts are awarded in the coming months, we will be reaching out to Haitian organizations to maximize their ability to compete. To the extent possible, we want to partner with local entities, rather than outside contractors, in order to creating lasting local capacity.

We are encouraged by the progress made in Haiti over the past year. In coordination with other donors and in support of the Government of Haiti, USAID has saved countless lives, began to build the country back better and strengthened the government's capacity to provide for its citizens. The number of Haitians living in camps has fallen by 700,000 since last spring. The U.S. Government alone has removed over 1.3 million cubic meters of rubble. More Haitians have access to clean water and health services today than before the earthquake. And thanks to the leadership of the Haitian Ministry of Health, with the support of the international community, the cholera epidemic has stabilized, with the number of cases growing more slowly and the fatality rate down.

To be sure, the challenges before us are still formidable. With over 800,000 Haitians still living in camps, moving people into safe resilient housing is one of our top priorities. Another is clearing away the remaining rubble. To make more progress on this front, we need help from other donors and the Government of Haiti in addressing land tenure issues and prioritizing funding for rubble removal and resettlement of the displaced.

Beyond these immediate needs, Haiti's long-term development plan is now in place, with United States' efforts focused in four areas: infrastructure, health, agriculture and governance. In a major reconstruction development last month, we reached agreement with the Inter-American Development Bank and one of the world's largest garment makers to develop an industrial park with the potential to double the size of Haiti's textile sector.

Despite the daunting challenges in Haiti, I am hopeful about the country's prospects. We have been encouraged by the ability of Haitian government agencies to rebound from the devastating earthquake and will be eager to work with the new government when it comes on board. But fundamentally, it is the tenacity and resilience of the Haitian people that inspire and drive us. Their unrelenting determination not just to survive, but to thrive, reminds us all of what is in reach when we join forces for the common good.

That dynamic in Haiti - of peoples, organizations, and governments coming together - is being repeated every day in various forms in the largest cities and smallest villages throughout the Americas. We help each other not only because it is the right thing to do and is an expression of our values, but because our well-being is linked to that of people throughout this vast and diverse hemisphere. As the peoples of Latin America and the Caribbean become more prosperous and more secure, so will we. Ultimately, successful development abroad will depend on efforts in the countries themselves. But USAID stands ready to help, because it is in our national interest to do so.

Thank you, Mr. Chairman. I look forward to the committee's questions.