In Depth In the News Program News
Vol. II: Issue 6, April 9, 2012
Program News From Buenos Aires to Athens: The Road to Perdition
The recent debt restructuring in Greece represents the third time in the past decade that a sovereign workout has been driven by political agendas leading to the erosion of international creditor rights and the rule of law. In a recently published Hemisphere Focus report, Senior Associate Arturo C. Porzecanski examines each case (Argentina 2001, Ecuador 2008–2009, and Greece 2012) and the implications of each for the future. Porzecanski argues that while government bonds are generally low-risk investments, sometimes these obligations are overridden by governments that lack the will or ability to honor commitments. To read the full report, please click here.
In Depth Trouble Brewing? Latin America’s Economic Ties with Slowing Economies Latin America has largely weathered the sluggish global economy, with much of the region enjoying solid growth rates. Yet there is increasing concern across the region that economic uncertainty in Europe coupled with China’s slowing growth could serve as a bigger threat to Latin American economies. The region’s average growth rate for 2012 may be 3.6 percent, compared with a regional growth rate of 4.3 percent in 2011and 5.7 percent in 2010. Spain’s deteriorating economy is a concern, as Spain is a major investor and trade partner of Latin America. China’s slowdown could also have a detrimental effect on the region’s commodity exports. As Spanish unemployment rates climb above 23 percent, Latin America has begun absorbing “reverse migration” from Spain—both Spanish citizens who returned and Latin Americans who immigrated during Spain’s economic boom. Some Spanish firms, especially banks, have in recent years been buoyed by growing Latin American economies that may no longer be able to sustain them. Experts from the IMF and World Bank have warned Mexico that the heavy presence of Spanish banks may make the Mexican banking system especially vulnerable. Chile’s banking sector faces similar concerns. While Latin America has done well by opening markets during global economic uncertainty, Spain’s problems serve as a reminder that the region is not out of the woods yet. —Christine Zaino
In the News North America: Mexico According to the Bank of Mexico, remittances to Mexico in February 2012 reached US$1.788 billion, 19 percent higher than January’s figure and the best monthly growth rate for February since 1995. The monthly growth rate was the highest since March 2011. Grupo Financiero BBVA Bancomer predicted that March 2012 remittances could exceed $2 billion. —El Universal (Mexico) Central America: Costa Rica
Critical Questions Brazil’s President Comes to Washington
Alvaro Piedra, manager of Procomer, a Costa Rican trade group, said his country is looking to expand business in Asia, especially China, in 2012. In addition to upcoming trips to China, Costa Rican companies will visit South Korea, Japan, and India. Procomer hopes to attract Asian businesses to Costa Rican trade conferences in June and September. —El Financiero (Costa Rica)
Sixth Summit of the Americas—A Primer
Caribbean: Haiti Haiti’s largest cellphone provider, Digicel Group, purchased one of its main competitors, Voilà, for an undisclosed amount on March 30. Both companies will continue to operate separately. Digicel has 900 employees and 3.5 million customers compared to Voilà’s 600 employees and 1 million customers. —Miami Herald (USA) South America: Venezuela
Background information and what to expect at the upcoming Summit of the Americas in Colombia. To access the full report, please click here.
The European Union banned Venezuelan airline Conviasa from flying in Europe because of safety concerns, joining a blacklist of 279 companies from 21 nations. Two other Venezuelan airlines, Estelar Latinoamérica and Aerotuy, were reviewed in depth and will now be under intensive monitoring. —El Universal (Venezuela) Brazil
Upcoming Events April 24: “Leveraging Research Networks in the Americas,” CSIS, B1-A/B Conference Center, 8:30 a.m.–4:30 p.m. April 25: “A More Inclusive Hemisphere? A Post-Summit Review,” CSIS, B1-A/B Conference Room, 9:30 a.m.–11:00 a.m. May 9: “Mexico: Elections and Prospects for Structural Reform,” CSIS, B1-A/B Conference Room, 9 a.m.–12 p.m. Hemisphere Insider is produced by the Americas Program at the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s). © 2012 by the Center for Strategic and International Studies. All rights reserved.
Brazil’s minister of finance Guido Mantega announced a US$31.6 billion stimulus to hopefully boost Brazil’s growth rate to 4.5 percent this year. The package consists of measures such as a US$24.6 billion investment in the development bank, BNDES, and cuts in payroll taxes for 15 business sectors. These cuts will save US$4.22 billion per year. The package will go into effect in July. —O Globo (Brazil) Argentina Ram Viswanathan, India’s ambassador in Buenos Aires, recently noted Argentina’s renewed protectionism and complained of generally poor treatment of Indian products. He warned that India could reduce imports, particularly soy oil, of which India is usually a top buyer. Argentina’s soy oil exports to India slid from US$1.74 billion in 2010 to $1.07 billion in 2011. Palm oil from Indonesia and Malaysia as well as sunflower oil from former Soviet states has substituted for Argentine oil. —La Nación (Argentina) Bolivia Bolivia’s deputy minister of electricity and alternative energy Miguel Fernández announced plans to invest approximately US$40 million in new projects on renewable energy nationwide. The objective is to source 75 percent of household electricity from solar, wind, biomass, and other renewables by 2015. Last year the government invested about $9 million in rural electrification projects. —El Diario (Bolivia) .................. Americas Program Staff: Stephen Johnson, director; Michael Graybeal, program coordinator Senior Associates: Johanna Mendelson Forman, Phillip McLean, Anton Edmunds, Carlos Regúnaga, Christopher Sands, Duncan Wood Senior Adviser: Luis Carlos Ugalde, Adjunct Fellow: Douglas Farah Intern Scholars: Sebastian Arandia, Siremorn Asvapromtada, Michael Lopesciolo, Christine Zaino
Program News From Buenos Aires to Athens: The Road to Perdition
The recent debt restructuring in Greece represents the third time in the past decade that a sovereign workout has been driven by political agendas leading to the erosion of international creditor rights and the rule of law. In a recently published Hemisphere Focus report, Senior Associate Arturo C. Porzecanski examines each case (Argentina 2001, Ecuador 2008–2009, and Greece 2012) and the implications of each for the future. Porzecanski argues that while government bonds are generally low-risk investments, sometimes these obligations are overridden by governments that lack the will or ability to honor commitments. To read the full report, please click here.
In Depth Trouble Brewing? Latin America’s Economic Ties with Slowing Economies Latin America has largely weathered the sluggish global economy, with much of the region enjoying solid growth rates. Yet there is increasing concern across the region that economic uncertainty in Europe coupled with China’s slowing growth could serve as a bigger threat to Latin American economies. The region’s average growth rate for 2012 may be 3.6 percent, compared with a regional growth rate of 4.3 percent in 2011and 5.7 percent in 2010. Spain’s deteriorating economy is a concern, as Spain is a major investor and trade partner of Latin America. China’s slowdown could also have a detrimental effect on the region’s commodity exports. As Spanish unemployment rates climb above 23 percent, Latin America has begun absorbing “reverse migration” from Spain—both Spanish citizens who returned and Latin Americans who immigrated during Spain’s economic boom. Some Spanish firms, especially banks, have in recent years been buoyed by growing Latin American economies that may no longer be able to sustain them. Experts from the IMF and World Bank have warned Mexico that the heavy presence of Spanish banks may make the Mexican banking system especially vulnerable. Chile’s banking sector faces similar concerns. While Latin America has done well by opening markets during global economic uncertainty, Spain’s problems serve as a reminder that the region is not out of the woods yet. —Christine Zaino
In the News North America: Mexico According to the Bank of Mexico, remittances to Mexico in February 2012 reached US$1.788 billion, 19 percent higher than January’s figure and the best monthly growth rate for February since 1995. The monthly growth rate was the highest since March 2011. Grupo Financiero BBVA Bancomer predicted that March 2012 remittances could exceed $2 billion. —El Universal (Mexico) Central America: Costa Rica
Critical Questions Brazil’s President Comes to Washington
Alvaro Piedra, manager of Procomer, a Costa Rican trade group, said his country is looking to expand business in Asia, especially China, in 2012. In addition to upcoming trips to China, Costa Rican companies will visit South Korea, Japan, and India. Procomer hopes to attract Asian businesses to Costa Rican trade conferences in June and September. —El Financiero (Costa Rica)
Sixth Summit of the Americas—A Primer
Caribbean: Haiti Haiti’s largest cellphone provider, Digicel Group, purchased one of its main competitors, Voilà, for an undisclosed amount on March 30. Both companies will continue to operate separately. Digicel has 900 employees and 3.5 million customers compared to Voilà’s 600 employees and 1 million customers. —Miami Herald (USA) South America: Venezuela
Background information and what to expect at the upcoming Summit of the Americas in Colombia. To access the full report, please click here.
The European Union banned Venezuelan airline Conviasa from flying in Europe because of safety concerns, joining a blacklist of 279 companies from 21 nations. Two other Venezuelan airlines, Estelar Latinoamérica and Aerotuy, were reviewed in depth and will now be under intensive monitoring. —El Universal (Venezuela) Brazil
Upcoming Events April 24: “Leveraging Research Networks in the Americas,” CSIS, B1-A/B Conference Center, 8:30 a.m.–4:30 p.m. April 25: “A More Inclusive Hemisphere? A Post-Summit Review,” CSIS, B1-A/B Conference Room, 9:30 a.m.–11:00 a.m. May 9: “Mexico: Elections and Prospects for Structural Reform,” CSIS, B1-A/B Conference Room, 9 a.m.–12 p.m. Hemisphere Insider is produced by the Americas Program at the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s). © 2012 by the Center for Strategic and International Studies. All rights reserved.
Brazil’s minister of finance Guido Mantega announced a US$31.6 billion stimulus to hopefully boost Brazil’s growth rate to 4.5 percent this year. The package consists of measures such as a US$24.6 billion investment in the development bank, BNDES, and cuts in payroll taxes for 15 business sectors. These cuts will save US$4.22 billion per year. The package will go into effect in July. —O Globo (Brazil) Argentina Ram Viswanathan, India’s ambassador in Buenos Aires, recently noted Argentina’s renewed protectionism and complained of generally poor treatment of Indian products. He warned that India could reduce imports, particularly soy oil, of which India is usually a top buyer. Argentina’s soy oil exports to India slid from US$1.74 billion in 2010 to $1.07 billion in 2011. Palm oil from Indonesia and Malaysia as well as sunflower oil from former Soviet states has substituted for Argentine oil. —La Nación (Argentina) Bolivia Bolivia’s deputy minister of electricity and alternative energy Miguel Fernández announced plans to invest approximately US$40 million in new projects on renewable energy nationwide. The objective is to source 75 percent of household electricity from solar, wind, biomass, and other renewables by 2015. Last year the government invested about $9 million in rural electrification projects. —El Diario (Bolivia) .................. Americas Program Staff: Stephen Johnson, director; Michael Graybeal, program coordinator Senior Associates: Johanna Mendelson Forman, Phillip McLean, Anton Edmunds, Carlos Regúnaga, Christopher Sands, Duncan Wood Senior Adviser: Luis Carlos Ugalde, Adjunct Fellow: Douglas Farah Intern Scholars: Sebastian Arandia, Siremorn Asvapromtada, Michael Lopesciolo, Christine Zaino
