I will do my best.
How is her basic sit, stay, lie down and leave it. Always best to work on these since they can be used elsewhere to help control your dog.
Is your dog overweight at all? The reason I ask is because the easiest and most positive way to get your dog to feel better in the situation you describe is by having her focus on a treat you have. Have both dogs sit and stay and as soon as she focuses on the other dog, say something like "focus" hold the treat in front of you, have her sit and focus on the treat. This will help her feel more comfortable around other dogs.
The harder way is to stop your other dog from alerting to begin with. It sounds fear based. Do you have an idea of why she is reacting this way?
Was there an issue in her puppyhood with another dog that might have scared her?
Check your feelins as well, are you tightening up on the leash before hand.
Ideally the second she tenses up (best NOT to have a retractable leash) is to correct her, stop the barking by just saying HEY. Stop it.
I have a friend who has a Yorkie. Great dog, but due to an incident involving dogs in the neighborhood the owner heard about, the dog started being afraid of everything out on the walk. People, dogs etc. Then he stopped going for a walk, then started bolting out of the car - not listening to his owner and testing her at every turn. I started with the car and the bolting, within half an hour of teaching his to sit and stay when I opened the car door - we hit pay dirt. His reward - a walk, which he really likes to do, but with his owner she was feeding him fear something would happen to him. When she started walking him, I noticed she had a death grip on his leash - not needed and she tensed up whenever they ran into other people and dogs, so the dog learned from the owner to react this way, I suspect your Havanese is reacting because of the initial reaction of the Schnauzer....start there. Stop the Schnauzer from reacting and pt him in a calm relaxed state of being (use whatever trick you can). If the Havanese does not cease her excitement, try the food thing. If those dont work - let me know. Keep an eye on their reactions during the walks, they often feed off each other. Ears up, tails up, stiff body usually means a state of being alert. The start of a potential problem. WHich is why we want them to stay calm. They can look, just not freak out. Good luck, keep me posted - lets try and work this out. PS hope you have a great holiday

Thanks for the tips, Mazer. I will try this. I suspect I am part of the problem. Because she is small, I worry that the big dogs of the neighborhood (behind invisible fences) will jump on her and hurt her. The schnauzer will walk right up to the big dogs he knows and stand and let them sniff him. But the girlie is afraid to even go up to the big dogs. She actually crosses the street away from them. They are "frisky" and don't have any manners and their owner doesn't do anything about them.

There is also an Italian mastiff that has come menacingly in our direction and I am afraid of that dog. The owner isn't strong or knowledgeable enough to control it.

I do have her on a retractable lead. Her regular leash seems so short to me. I do keep the boy on a regular lead, but he is much better about being happy with being just a few feet from the curb. I can try to have her on the shorter lead too and see if it helps. She gets milkbones - just little pieces - but I think a little tastier treat might get her attention better outside.

She is good on her sit, down and come commands. We'll get to work and I will report back.

Thanks so much for the help and I hope you have a good holiday season too!!

Lets look at this - I suspect I am part of the problem. Because she is small, I worry that the big dogs of the neighborhood (behind invisible fences) will jump on her and hurt her. Did something happen or is it a general fear?
WIth dogs you dont know and or dont trust, take a step between the other dog and your dogs, this way you are "claiming" your dogs. You can tell the other dogs "leave it" or "go home" In as deep as voice as you can muster with serious attitude. Many dogs will respond to energy and you dont have to say anything at all in some cases.

Lets look at this =
The schnauzer will walk right up to the big dogs he knows and stand and let them sniff him. But the girlie is afraid to even go up to the big dogs. She actually crosses the street away from them. They are "frisky" and don't have any manners and their owner doesn't do anything about them.
It is best not to force things with other dogs, however it is also not great to walk away from dogs that are just trying to get to know your dogs. Which is what dogs do. We dont want to overwhelm your pup, so small steps are best. If you try and force dogs sometimes things go backwards and it can be harder to work with them. I suggest using a reglaur leash with both dogs...it might help you feel how your dog is reacting. Check your feelings towards other dogs tho. Ask yourself if you are telling yourself a story about what might happen and if you can feel differently about whatever dog is near you. I suggest going out for a walk without the dogs and see if you feel differently towards the dogs you meet, and see if the dogs you meet react differently to you. If you can, think of yourself as just taking a walk....nothing else.

There is also an Italian mastiff that has come menacingly in our direction and I am afraid of that dog. The owner isn't strong or knowledgeable enough to control it.

If you walk by yourself without the dogs, ask the owner if you can give each other a wide berth. Let the owner know you are worried about your dogs not hers....might help

I do have her on a retractable lead. Her regular leash seems so short to me.
YOu want your dog by your side as much as possible during a walk.
She gets milkbones - just little pieces - but I think a little tastier treat might get her attention better outside.

She is good on her sit, down and come commands. We'll get to work and I will report back.

Thanks so much for the help and I hope you have a good holiday season too!!
Excellent. Hope all goes well, Let me know what works and what doesnt.

Well, the weather has kept most everybody inside, but finally today we came across a couple of yellow labs being walked by a woman.

My schnauzer started to get huffy, but a quick tug of the leash and he stopped. The Havanese just walked straight ahead and completely ignored the dogs. I praised her profusely and we continued on.

The difference today, I think, was that the dogs coming our way were walking the way you suggested - right along side the owner, at a good clip and barely gave us a glance. The woman was smiling and said "hello". I'm sure that Carmelita did not feel threatened by these dogs at all.

We'll keep working on it. I'll let you know. Thanks for the help.

Don't forget that big dogs ARE threatening, it only takes one to turn and attack yours. My beagle was attacked and severely hurt- he just about died- from a big dog bite and he is the friendliest dog on the planet. Every dog is his friend.
There is a poster here who lost her dogs (dachshunds? I can't remember), from a dog attack, so I am very careful and protective when walking my dogs.

Once, I was walking in a different neighborhood with a good friend, and we got lost, and I had to walk down a street that had pitbulls in front yard fences -that kind of neighborhood- and we carried the dogs until we were past all the jumping, snarling threats. It was horrific, I was so scared (My girl friend wasn't :-)

Bumblebeez, I am sorry about your poor beagle being attacked. I do agree that big dogs are threatening. Even if they don't want to eat you, but just "play", their "play" can cripple a small dog.

It certainly can be nerve wracking to walk your dogs these days. I am trying to work on keeping my two calm when we come across other dogs. I wouldn't want their "snippy" attitude to provoke another dog.

I don't think you can ever let your guard down when out walking dogs - or even just out walking yourself.

Thanks for your post.

Had another good walk this morning. We saw a woman walking her what looks to be a golden retriever mix. This dog always gets very excited, whines and jumps at us when they pass.

So when I saw them coming, I pulled my two over to a driveway and I just said in a sweet voice, OK, guys, nice and calm, nice and calm. The schnauzer had just a little excited yip which stopped on a little tug on his leash and I'm happy to say that Carmelita stood calmly and watched him go by.

I spoke to the woman and asked about her dog's friendliness and she said he is good with other dogs, but just gets too excited on their walks. She is working on him and has very good control of him.

I think we are making some good progress here.

YES!!!!!!!!!! Excellent. Reminding yourself and your pups all is well in the world is a wonderful step in the right direction., keep up the good works