Latin America Could Turn to Russia, China in Wake of Trade Split With US

The governments of some Latin American countries have signaled that they are ready to “break their dependence” on the United States; Russia and China could play a key role in the region, Venezuelan political analyst Ernesto Wong told Sputnik Mundo.

Chinese President Xi Jinping
In an interview with Sputnik Mundo, Venezuelan political analyst Ernesto Wong said that in Latin America, there are several factors which have given rise to the hope that this year will see a number of key political changes in the region.

One of these factors is the willingness of some regional governments to “break their dependence” on the United States and allow Russia and China to play a key role in the region, according to Wong.

“Latin America is at odds with Washington but it is developing friendly ties with China and Russia, which is why in 2017 the region is expected to overcome the imperialist dependence on the US and to establish more favorable conditions for exchange… trade and investment with Russia and China,” Wong said.

As for China, Wong referred to the January 20 meeting between Beijing and the Community of Latin American and Caribbean States (CELAC), which he said opened up new prospects for the exchange of public and private capital.

“It’s important that none of the countries of the Pacific Alliance decided to break off relations with China, which means that they are  interested in continuing trade ties with Beijing,” he said. The Pacific Alliance is a Latin American trade bloc which currently includes Chile, Colombia, Mexico and Peru.

According to Wong, the most important affecting the Pacific Alliance is the existence of Trump’s so-called model of “neo-isolation.” The alliance had been seen as a close partner of the United States and Canada; its members (less Colombia) were among the countries set to co-establish the Trans-Pacific Partnership (TPP) this month.

This initiative was nullified when Trump abandoned TPP on January 23. Trump also raised the question of revising the terms of the North American Free Trade Agreement (NAFTA).

“As a consumer, the US is in a critical situation after it greatly reduced its imports, which were supported by the free trade agreement. Trump wants to get out of it because he intends to develop national industry,” Wong said, adding that this process will also be affected by the critical situation in Western Europe.

Aside from to China and Russia, Latin American countries may also invest in Africa, according to Wong.

“This is potentially a good opportunity because openness toward Africa would help promote Latin American products there and the African continent would benefit from receiving equal conditions for exchange,” he said.

He added that such transparency would also be attractive for those countries in the region which are not progressive because they seek to improve relations with other regions, which could give them the opportunity to obtain a larger income.Wong emphasized that it is Latin America distancing itself from the United States and rapprochement between Eurasia and Latin America that will pave the way for regional countries becoming more independent and sovereign.

Article originally published here
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Uruguay and Chile, least corrupt countries in LAC region says Transparency International

uruguay-corrupcionIn Latin America, Uruguay leads with a ranking of 21, followed by The Bahamas and Chile both in 24th place, and Venezuela figures at the bottom.

Over two-thirds of the 176 countries and territories in this year’s Corruption Perceptions Index fall below the midpoint of a scale spanning 0 (highly corrupt) to 100 (very clean), said Transparency International (TI) upon the release of the non-profit’s 2016 report. No country reached above 90.

The global average score is a paltry 43, indicating endemic corruption in a country’s public sector. And top-scoring countries are far outnumbered by countries where citizens face the tangible impact of corruption on a daily basis.

Results can be viewed on a map at the TI website.

In Latin America, Uruguay leads with a ranking of 21, followed by The Bahamas and Chile both in 24th place, and Venezuela figures at the bottom.

This year’s results highlight the connection between corruption and inequality, which synergistically create a vicious circle of corruption, unequal distribution of power, and unequal distribution of wealth, said the index researchers.

“In too many countries, people are deprived of their most basic needs and go to bed hungry every night because of corruption, while the powerful and corrupt enjoy lavish lifestyles with impunity,” said José Ugaz, Chair of Transparency International

The interplay of corruption and inequality also feeds populism, said TI. When traditional politicians fail to tackle corruption, people grow cynical and are more include to elect populist leaders who promise to break the cycle of corruption and privilege. Yet this is likely to exacerbate – rather than resolve – the tensions that fed the populist surge in the first place.

Leading the index of countries examined in 2016 were Denmark and New Zealand with scores of 90/100. At the bottom of the ranking sit South Sudan with 11/100 and Somalia with 10/100, according to the index results.

China Seizes Opportunities in Latin America

chinese-dragonChina has big plans for Latin America—plans that seem to reflect China itself: massive and ambitious.

There are plans for a $10 billion, 3,300-mile-long transcontinental railroad snaking through the jungles of the Amazon river basin and over the highest mountain range in Latin America, linking the Atlantic shore to the Pacific. There’s talk of a $50 billion supersized canal carving a 161-mile-long swath across Nicaragua, offering passage to the megatankers of tomorrow and overwhelming even the newly expanded Panama Canal to its south.

There are more. Many more. These gargantuan projects are aimed at fueling China’s needs for resources and feeding South America’s need for energy and infrastructure. But geopolitics also play a role as China strives to make Latin America an economic partner, if not a counterpoint to the United States.

In fact, China’s investments in Latin America, from mining to massive hydroelectric dams, nuclear reactors and railroads, grew by 500 percent between 2000 and 2010, totaling nearly $100 billion, with another $250 billion in spending promised over the next decade. And while the U.S. still accounts for more than three times as much in trade and investment in the region, some analysts see disturbing signs in the steadily shifting balance.

In 2000, the Chinese portion of Latin American trade was about 2 percent. The U.S. share was 53 percent. Ten years later, the Chinese share was up to 11 percent and the U.S. portion was down to 39 percent.

“Clearly we are still the dominant player vis-à-vis them,” says Francisco Cerezo, the U.S. head of DLA Piper’s Latin America corporate group. “But it does speak to the trend. And I would be more concerned about the trend and making sure you right the ship and you focus on it properly.”

The past two decades of forays into Latin America come as part of China’s “go global” plan. Its first priority: raw resources to fuel its economic growth. China is heavily, and increasingly, dependent on imported oil. Its energy needs led it to offer some $65 billion in loans to Venezuela’s government in the last decade, according to the Washington nonprofit Inter-American Dialogue, along with direct investments in oil production and infrastructure there.

China also single-handedly accounts for nearly a fourth of the world’s copper demand, along with significant demand for tin and iron ore. “That’s why you see them coming into Latin America’s mining sector, which is huge,” says Jerry Brodsky, a partner and director of the Latin American practice group at Peckar & Abramson. “It’s perhaps the largest economic driver in Latin America’s mining.”

China gets much of its copper from Chile, while the China-based Chinalco Mining Corp. International put $3.5 billion into the Toromocho mine in Central Peru, giving it control of “the world’s second largest preproduction copper project, as measured by proved and probable copper ore reserves,” according to the company’s website.

Now China is reaching beyond resources. Its latest wave of investments involves massive infrastructure and energy projects.

The China Three Gorges Corp. has been rapidly acquiring hydroelectric dams in Brazil since 2013, paying nearly $4 billion in June to take over operation of two of the country’s largest dams, with a combined capacity to produce 5 gigawatts of electricity. That came just three months after China Three Gorges announced a proposal to build a new 8-gigawatt dam on the Tapajos River.

China’s State Grid Corp. is developing two transmission lines to deliver power from the Belo Monte dam in the Amazon basin. Last year, state-owned China National Nuclear Corp. signed a $15 billion deal to build Argentina’s fourth and fifth nuclear power plants, roughly doubling the amount of electricity generated by the country’s nuclear plants. Construction of the first of the new reactors, in cooperation with Argentina’s state-owned Nucleoeléctrica, is due to begin early next year.

These projects come on top of the nearly $42 billion that China invested in infrastructure in Latin America in just 2013 through 2015 alone. China is finishing construction of a space tracking, telemetry and command facility in Patagonia, Argentina, complete with a pair of maneuverable parabolic antennas, engineering facilities, and a $10 million electric power plant.

China Harbour Engineering teamed up with local partners to win the contract for Autopista Mar 2, a 152-mile motorway connecting four towns north of Medellin, Colombia. And, in May, it landed a $465 million road contract in Costa Rica.

“They’re providing what the specific markets need,” says Brodsky. “They follow the path of least resistance. Latin American needs infrastructure. Brazil has an insufficient production of local energy. So does Argentina. The road projects in Colombia are booming right now because for 30 or 40 years they spent all their money fighting the guerrillas, and they didn’t pay attention to their road infrastructure. So now there is an accelerated program in Colombia for road building.”

The nature of the projects also plays to China’s strengths. Despite its recent economic slowdown, China remains flush with money from its boom years. Combined with the technical expertise that it has built with domestic projects and industries, those deep pockets allow China’s state-owned companies to compete at a scale that few challengers can match.

“When you get to that level of megaprojects, there are not that many qualified bidders out there­—people that have not only the technical capacity but the financial capacity,” Brodsky says, adding that Chinese companies “have the money to self-fund a lot of their projects, and that makes them very competitive when it comes to bidding for big, large projects in Latin America.”

Abridged, original article published here

India Looks to Boost Access to Latin America, Eyes $100 bn in Trade

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In a bid to ease hurdles and open up access to new frontiers, the government aims to enhance connectivity with Latin American (LatAm) countries — a move which will ease the long-standing demand of various nations. Trade volume could easily go up to $100 billion.

Sources in the government told FE, “At the recently concluded India-LAC summit organised by the MEA in Mexico, it was felt that South-South cooperation needs to be more vibrant and effective. Poor connectivity emerged as the biggest hindrance for investors — connectivity would go a long way in enhancing business between India and the LatAm and Caribbean region.”

“Trade and investments are below expectations in the region, while the shipment takes almost 60-90 days. And there are no direct flights,” sources added.

The region offers immense opportunities to Indian companies, especially in sectors such as energy, pharmaceuticals and agri business. Trade between India and Latin America is likely to double in the next five years from the current level of $46 billion, with direct shipping, air connectivity and visa-on-arrival, as well as free trade agreements, as some of the steps being taken to boost trade with the region.

While transportation costs and the lack of familiarity with each other’s markets were previously cited as the big impediments, the government is planning to improve connectivity to the region.

 

Experts say that the trade volume could easily go up to $ 100 billion if the leaders of both sides blend proactive diplomacy, address issues like enhancing connectivity and leverage multifarious win-win opportunities, especially in areas like energy, agriculture, nutritional processing, textiles, transport and IT & ITES.

Countries in the region, especially those landlocked like Bolivia, recognise that their connectivity too needs to be improved.

Seeking investments in developing Bolivia’s massive lithium deposits, which account for 60% of the world’s reserves, and keen on selling potassium and urea to India, minister for development planning René Orellana of Bolivia, told FE, “In an effort to improve connectivity, we are planning to improve our own infrastructure in Santa Cruz and creating a big business hub where big planes could land.”

Cuba, as pointed out by its ambassador, Oscar I Martínez Cordovés, has embarked on a rapid programme of modernisation and has in place special economic zones and technology.

Nicaragua is seeking Indian collaboration in the renewable energy space, which offers huge capacities for development of this alternate energy source. It is also looking at the Indian companies for mining too.

Countries like Haiti are anxious to see a balanced sharing of resources between the developed North and the developing and least developed countries of the South.

This is critical to pushing development in the growth-starved South, which is in urgent need of education, transfer of knowledge and technology, and use of great capacities in R&D for the socio-economic upliftment of its people.

Today, 60% of the current bilateral trade is in oil, hydrocarbons, minerals and agriculture commodities, but it is now moving into niche areas like pharmaceutical and IT services.

Article originally published here

Will Latin America Regain Prosperity in 2017?

7301Developments in the United States and China will impact Mexico and South America differently, experts say.

Latin America’s major nations are hoping that 2017 will be the year that they finally recover from the lingering impact of weak commodity prices. For the fourth consecutive year, Latin America’s exports contracted in 2016, according to a report by the Inter-American Development Bank (IDB), using detailed data for 24 countries in the region. In 2016 Latin American and Caribbean exports fell by approximately $50 billion, or 6 percent. The value of exports was expected to reach $850 billion for 2016, a lower rate of contraction than the 15 percent drop suffered by the region in 2015. This latest annual decline was due primarily to declining sales to the United States (down 5 percent) and to the region itself (an 11 percent contraction), and, to a lesser extent, declining exports to China (down 5 percent), the rest of Asia (a 4 percent drop), and to the European Union (minus 4 percent).

Leaders in Latin America are also pondering what impact incoming U.S. President Donald Trump’s policies will have on the region’s economic growth and global trade in 2017. During his campaign, Trump advocated imposing protectionist barriers on U.S. imports of Latin American goods, which could potentially thwart the region’s attempts to boost exports to earlier, healthier levels. Another uncertainty facing Latin America is how Trump’s economic strategy will impact the value of the U.S. dollar.

The U.S. dollar will appreciate for two reasons, predicts Wharton management professor Mauro Guillen, who is also director of The Lauder Institute. “One reason is that interest rates are going to go up. A second reason is that the U.S. economy is probably going to do better than others,” he notes. The rise of the dollar will be “bad for countries that are commodity exporters, because commodity prices will tend to go down — and short-term capital flows are likely to hurt countries like Brazil or Peru or Chile,” Guillen says. However, “contrary to the conventional wisdom, Mexico will do well because of the stronger dollar, while South America is going to be in a lot of trouble for the same reason.” Unlike the major nations of South America, Mexico is not a commodities exporter, but a major exporter of manufactured goods such as automobiles and electronics. “Mexico competes against China, but South America supplies China.”

But while “an acceleration of demand, particularly in the United States and in China, could sustain exports” from Latin America to the U.S. and China, “the resurgence of trade protectionism” in the United States “could bias the forecast,” according to Paolo Giordano, coordinator of the IDB report, and the principal economist of its integration and trade sector.

Another major issue is the ultimate impact of any changes in U.S. policy toward China, which is now the most important trading partner for several countries in Latin America. “That is a huge issue for some countries in South America,” notes Guillen. If China starts growing a bit faster, despite changes in U.S. trade policy, the results will be positive for South American commodity exporters, such as Argentina, Brazil, Chile and Colombia. “But if it does not, then South America is going to have continuing problems…. If China doesn’t grow as much, as has been the case for the last three or four years, those countries will suffer because China has become their most important customer.”

According to the IDB report, “The prospects for a reversal of the downward trend in 2017 are associated with a scenario in which commodity prices continue to improve, and intraregional trade recovers. Those countries whose real exchange rates have depreciated could also harness greater price competitiveness to stimulate [manufactured goods] sales and diversify their export baskets.”

A NEW PATH FOR BRAZIL?

Brazil, the largest economy in the region, has sunk into the worst recession in its modern history amid low prices for key exports, high inflation, relentless political turmoil and depressed confidence levels. In annual terms, industrial production fell 7.3 percent in October, a larger drop than the 4.7 percent decrease recorded in September, and a five-month low. According to Barcelona-based LatinFocus Economics, Brazil’s economy should exit recession in 2017 after falling 3.4 percent in 2016. “However, the pace of recovery is likely to be meager amid austerity measures and modest external conditions.” The consensus of economists polled by LatinFocus projected Brazil’s GDP growth at 0.8 percent in 2017.

Widespread declines were recorded nearly across the board in fall 2016 in 22 of the 26 categories surveyed by the Brazilian Institute of Geography and Statistics (IBGE). The categories that declined the most were the production of mining and quarrying, coke, oil products and biofuels as well as food products. Annual average growth in industrial production improved from minus 8.7 percent in September, but only to minus 8.4 percent in October.

Felipe Monteiro, a professor of strategy at INSEAD and a senior fellow at Wharton’s Mack Institute for Innovation Management, notes that Brazilian analysts were aware that 2016 would be a year of “a lot of uncertainties,” because of the “big issue of impeachment” of President Dilma Rousseff, which ultimately occurred in August. “We were hoping that we would see the light at the end of the tunnel, and we got some sense of resolution — that things would move forward after the impeachment [of Rousseff],” Monteiro says.

But a second period of crisis followed later in 2016, culminating in a scandal involving construction giant Odebrecht, S.A., which now “puts Brazil again into another tunnel with a lot of uncertainty about how long it will take to resolve, and how many people will be implicated,” Monteiro adds. As of mid-December, more than 70 of Odebrecht’s executives, including family patriarch and Chairman Emilio Odebrecht, his jailed son and former CEO Marcelo Odebrecht, had agreed to make plea statements that have been received by the Supreme Court to validate them as evidence.

The good news for Brazil in 2017, says Monteiro, comes from two considerations: First, Brazil’s current economic team is more pro-business than Rousseff’s populist aides, and “it is doing the difficult things that have to be done to put the economy back on track.” Brazil’s economic austerity plan was approved in December, outlining measures to freeze expenses for the next 10 years. “It is painful but necessary,” Monteiro notes. “Despite all the weaknesses of the current government, they managed to approve it. This plan gives more hope that the economy will go back on track, [although] we are far from a resolution of the political fight.” Moreover, as it moves forward after Rousseff’s impeachment, Brazil has remained on a democratic path, “with no rupture — and no censorship. So, for a young democracy like Brazil, as painful as it is, this should give us some encouragement.”

Although the future of U.S.-Mexico relations came into question following Trump’s surprising election victory, his win did not create the same level of uncertainty in Brazil, given the different nature of its ties to the U.S. Not only does Brazil not export a high level of manufactured goods to the U.S., the U.S. enjoys a trade surplus with Brazil, unlike the case with U.S.-Mexico trade. In 2015, the U.S. surplus with Brazil was $4.3 billion, down 64.2 percent ($7.6 billion) compared with 2014. Total U.S. exports to Brazil in 2015 amounted to $32 billion, down 25 percent ($11 billion) from 2014, but up 106 percent from 2005. The top U.S. imports from Brazil in 2015 were mineral fuels, aircraft, iron and steel, and machinery. With no equivalent of NAFTA to renegotiate, U.S.-Brazilian trade discussions in the Trump era will likely boil down to building “a very pragmatic, bilateral commercial relationship,” based on a “more deal-by-deal approach” to problem-solving in specific sectors, Monteiro says.

Despite such pragmatism, in the age of Trump there is a risk that “if the relationship between Latin America and the U.S. becomes less important because the U.S. shifts more of its internal political relationships toward Russia, that will open space for China to play a more important role in Latin America,” Monteiro notes. China is already making a number of efforts in that regard, he adds. Another risk, according to Guillen, is that if the Trump administration increases tariffs on imported goods from Latin America, “that is going to increase consumer prices in the U.S.” and “inflation is also going to accelerate.” Guillen cautions that U.S. policy makers need to consider not just the immediate impact of their measures, but their “second order effect,” which could turn out to be very different from what they expect.

THE CASE OF COLOMBIA AND ARGENTINA

Elsewhere, two other major countries face somewhat different challenges in 2017.

In 2016, the economy of Colombia grew by just 1.2 percent in the third quarter, according to production-based GDP data, the slowest quarterly growth since the global financial crisis hit in 2009. The country’s results were affected by a prolonged truckers’ strike and subdued global trade. More positively, the country’s Senate approved a revised peace agreement with the FARC rebels in November, a month after the original proposal was rejected in a controversial plebiscite.

The new deal establishes a stronger government presence in rural areas dominated by the FARC, and it obliges FARC rebels to divulge their assets while providing judges with more authority if insurgents are found guilty of drug trafficking. Nevertheless, public opposition to the pact remains strong, led by former president Alvaro Uribe. Moreover, the weakness of the global economy “is weighing heavily on the country’s economic outlook,” notes a LatinFocus Consensus Forecast. For all that, the peace agreement could boost growth in tourism, oil exploration and foreign direct investment in Colombia’s conflict-ridden areas, adds that report. The consensus of analysts was that Colombia’s economy will grow by 2.5 percent, up from 2.0 percent in 2016.

In Argentina, which is transitioning from the populism of two Kirchner presidencies (Nestor Kirchner from 2003-2007 and Cristina Fernandez de Kirchner from 2007-2015) to the business-oriented administration of current President Mauricio Macri, the economy is expected to return to growth in 2017, reflecting the impact of Macri’s market-focused economic reforms, and the improved business sentiment, according to a LatinFocus Consensus Forecast. After dropping by 1.1 percent in 2016, industrial production in Argentina is expected to expand by 2.5 percent in 2017.

For the populism-prone nations of South America, there is an irony in the timing of the victory of Trump in the United States, says Monteiro. “2016 was a very important year for countries like Argentina and Brazil to move away from very populist governments. Anti-business nationalist regimes – such as Fernandez de Kirchner in Argentina and Rousseff in Brazil — were replaced by governments that are much more pro-business — with Macri in Argentina and Michel Temer in Brazil,” he says. “Ironically, now when those two countries, which have a very important influence on the rest of the region, are moving towards more good relationships in global trade, the United States, which has always been pushing for that kind of [free-trade] agenda, is [moving] towards more isolationism. It is almost a paradox.

Article originally published here

Brazil Sets Record Trade Surplus of $48 Billion

brazil-coverBrazil’s trade surplus soared to a record U.S. 47.69 billion, the country’s trade ministry’s statistics revealed on Monday.

Amid political turmoil, a recession and a weaker real, exports boomed as imports were slashed in 2016. The previous record of $46.45 billion was in 2006, Reuters reported.

Brazil’s new record was more than double 2015’s trade surplus of $19.68 billion. Brazil’s 2016 exports totaled $185.24 billion, compared with imports worth $137.55 billion, according to the trade ministry.

The trade surplus occurred even though exports of many agricultural commodities fell, with the exceptions of pork and sugar, after a crippling drought devastated crops last year.

Corn grain exports fell the most, down 26 percent. Exports of soybeans dropped 8.2 percent, along with corn on the cob, which fell 13.2 percent compared to the previous year, the trade ministry said.

Soybean bran exports fell 11 percent, along with beef, down 7 percent and chicken, which decreased 5 percent.

However, pork exports increased 15 percent and exports of raw sugar increased 40 percent.

Brazil  posted hefty increases in semi-manufactured and manufactured goods, according to the trade ministry’s statistics.

Exports of gold ore increased 31 percent, while lumber jumped 17 percent.  Increases in exports of manufactured goods included: oil rigs, (87 percent), cars,  (38 percent), and cargo vehicles, 27 percent).

Brazil’s exports to China, its biggest buyer, slid 1.2 percent to U.S.  $37.4 billion due to the decrease in soybean exports, according to the trade ministry.  The U.S. was the second-largest customer, buying  $23.2 billion in exports from Brazil.  Argentina was third, at $13.4 billion.

The drop in ag exports contributed to a decline in exports to some regions, according to the trade ministry.  Although exports to Argentina were up 4 percent, exports fell to MercoSur, the Latin American trading bloc.  Countries in MercoSur include Argentina, Uruguay, Brazil, and Paraguay. Venezuela was suspended as a member on Dec. 1 of 2016.

Article originally published here

Why China is Cosying up to Latin America

china-lac-373x300Just days after Donald Trump’s victory in the US election, President Xi Jinping (習近平) set off for Latin America – his third trip to the region since taking office in early 2013. Beijing has laid out a new road…

BY CARY HUANG

Beijing has laid out a new road map for its relations with Latin American and Caribbean countries in a strategic push to expand its clout on the continent.

China’s growing interest in Latin America is raising many questions in the West, especially in the United States, which has considered the region its backyard since it adopted the Monroe Doctrine in the 1820s. That doctrine states US opposition to any outside intervention in North or South American affairs – and says any such action will be viewed as “the manifestation of an unfriendly disposition towards the United States”.

This closer engagement with Latin American countries coincides with a US president-elect who has vowed to scrap regional trade deals, build a wall on the Mexico border and deport undocumented immigrants.

But it’s an engagement that has caused business to boom. Trade between China and Latin America and the Caribbean multiplied by 22 times between 2000 and 2013, reaching US$236.5 billion in 2015. In 2014, China overtook the European Union to become the region’s second largest trading partner after the US.

The following year, Beijing signed a slew of agreements with Latin American countries promising to double bilateral trade to US$500 billion and increase the total stock of investment between them from less than US$100 billion to US$250 billion within ten years.

China sees its relationship with these countries as primarily economic rather than political or ideological.

Economically, China aims to diversify the sources of energy and materials for its manufacturing-centred economy. It also aims to find new markets for the country’s industrial overcapacity.

But its rising economic influence will inevitably come at Washington’s expense. In 2000, China’s share of Latin American trade was 2 per cent, compared to the US’ share of 53 per cent. By 2010, China’s share had grown to 11 per cent, while the US’ had dropped to 39 per cent.

China is also using its economic clout to win diplomatic allies and challenge US supremacy and its dominance in the region. Beijing is intent on making friends in the US’ historical sphere of influence to match America’s allies in East and Southeast Asia. The diplomatic offensive is part of a larger plan to make China a world-class power under Xi’s “Chinese dream” of national rejuvenation. Xi also wants to turn China into a maritime force, capable of projecting power, both soft and military.

Beijing might also be trying to target Taiwan. Of the self-ruled island’s 22 allies, 12 are in South America, and cross-strait relations have become decidedly chilled since Tsai Ing-wen of the independence-leaning Democratic Progressive Party took office in May.

Nevertheless, the debate in Washington will focus on whether China’s growing clout will undermine American diplomacy in the region, as it runs counter to the Monroe Doctrine. Anyone suspicious of China’s ambitions might point to America’s own history. A little more than a century ago, the US’ construction of the Panama Canal heralded the advent of a new era of American dominance. Now China looks to be doing the same with its work on a 270km Nicaraguan canal that will one day rival the Panama route.

Historically (post-Mao) China’s leadership has eschewed interventionist diplomacy. But the leadership is shifting that policy and it is possible Latin America will become the stage for a showdown between the world’s greatest superpower and a fast-rising one. ■

Article originally published here

Europe in Latin America

eurolatThe EU’s development cooperation has achieved several successes in Latin America and is respected accordingly.

European development cooperation has a long tradition in Latin America and has a good reputation. In the past two decades, the EU has signed trade agreements with different countries and groups of countries in the region, including Mexico, Chile, Central America, the Andean Community and the Mercosur association of states. At the first Europe-Latin America summit in Rio de Janeiro in 1999, the leaders from both world regions concluded a strategic partnership. This partnership was strengthened at subsequent meetings – most recently at the eighth EU-LAC summit in Brussels 2015.

The EU has cooperated with Latin America in areas such as finance, trade and science. It is promoting investments and supports corporate cooperation. Several programmes have brought it special recognition, among them “AL-Invest”, which facilitates international expansion for small and medium enterprises, “Euro-Solar”, which makes renewable energies available to disadvantaged sections of the people, “LAIF”, that promotes investments in infrastructure, and “EUROSociAL”, which strengthens economic integration and social cohesion. In the areas of administrative decentralisation and local development, EU programmes have also delivered results in cooperation with multilateral organisations like UNDP, CEPAL and the IDB.

Article originally published here

IDB Backs Paraguay Agriculture, Economic Program

2015-06-10-1433961822-3928805-550pxpry_orthographic-svgParaguay will improve the competitiveness of its farm and livestock sector and its economic integration, particularly in the east of the country, with a road upgrade and conservation project backed by a $90 million loan approved by the Inter-American Development Bank (IDB).

The beneficiaries will be users of the highway grid, especially small- and medium-size producers, and a population estimated at 522,000 people, of whom 76 percent live in the countryside.

The goal of upgrading and conserving roads is to improve travel conditions, the level of service and safety on motorways that are part of the program in a bid to cut transport costs, travel time and the number of accidents.

The stretches of road included in the project are part of a major logistical corridor that connects areas of production in the east of Paraguay with places that process, transform and market the country’s main export products, and with ports.

“The stretches of road that will be improved have been designed to be resilient to the effects of climate change, particularly heavy rain. Moreover, by improving the corridor with climate change considerations in mind, we will be strengthening the road network of the Oriental Region of Paraguay and consolidating a route that will be more resistant to flooding”, said Ernesto Monter, Project Team Leader of the IDB.

The works that are scheduled include the paving of a stretch of approximately 90 kilometers between San Juan Nepomuceno and Route 6, which is key to national and international integration as it connects the south-central part of eastern Paraguay, where 54% of farm production is concentrated, with the so-called Hidrovía Paraguay-Paraná, where the country’s main grain export ports are grain processing plants are located.

Furthermore, the extension of this corridor from Route 6 to the east will provide access to one of the main agricultural production and processing centers and the ports of the Paraná River.

The program will finance all work necessary to improve and conserve major roads in the east, including upgrading the technical features of existing ones and widening roads and building shoulders to bring them up to standard with other stretches along the corridor.

The project will also finance the construction of ring roads around three populated areas which will reduce heavy vehicle traffic in these communities, reducing noise, pollution and the risk of accidents. The project also includes the implementation of safety features such as pedestrian crosswalks and mechanisms to get cars to slow down.

The $90 million loan is over 23 years with a grace period of seven-and-a-half and an interest rate pegged to the Libor.

About the IDB

The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.

Article originally published here

Agreement Between BNDES and IDB foresees US $ 2.4 Billion for Infrastructure

brazil-1

Investment

Resources can be used to finance sustainable energy sectors and in micro and small enterprise projects

The National Bank for Economic and Social Development (BNDES) approved this week a US $ 750 million loan for the Sustainable Energy Finance Program.

The project focuses on increasing alternative renewable energy participation –  wind, solar and biomass –  the Brazilian energy matrix and energy efficiency. The funding will have a local counterpart of up to US $ 150 million.

This is the first operation of the Conditional Credit Line Agreement for Financing the Productive and Sustainable Investment, worth up to US $ 2.4 billion, which will be formalized between BNDES and the Inter-American Development Bank (IDB).

The BNDES will have a disbursement period of up to four years from the date of signature of the agreement, a 54-month grace period and a three-month Libor-based interest rate, plus the applicable margin for loans from the IDB’s ordinary capital.

Partnership

The IDB is historically the main international creditor of the BNDES, whose partnership began in the 1960s. Until 2010, 21 loan agreements were signed between institutions, with a historical value of more than US $ 8 billion.

The most recent contracts were aimed at supporting micro, small and medium-sized enterprises operations under the second Conditional Credit Facility Agreement.

Source: Portal Brazil, with information BNDES

Article originally published here