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

indialac

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