Palestra: Tendencias geopoliticas na America do Sul - Diego Solis

Palestra: Tendências geopolíticas na América do Sul

O presidente da Funag e o Diretor do IPRI têm o prazer de convidar todos os interessados para a palestra, em espanhol, de Diego Solis, diretor para a América Latina da Stratfor, sobre “Tendências geopolíticas na América do Sul”.
O palestrante pretende fazer uma introdução das tendências geopolíticas e os desafios futuros para os diversos países da América do Sul, da Colômbia ao Brasil, dando ênfase à crise venezuelana e ao papel da China na região.
Diego Solis é mestre em geopolítica e segurança pela Universidade de Londres, fundador da Latam Image Consulting Group, com sede na Guatemala, e consultor independente especializado em riscos geopolíticos e no planejamento de cenários para investidores; trabalha com bases na Guatemala e em Austin, TX.
A Stratfor é a mais importante consultoria americana em inteligência geopolítica, analisando tendências, anomalias e projeções geopolíticas em diversos cenários do mundo contemporâneo.
A palestra será feita no Auditório Paulo Nogueira Batista, no Anexo II do Itamaraty, às 16:00hs da quinta-feira, 13 de outubro.

Tendencias geopoliticas na America do Sul: palestra de Diego Solis (Stratfor) - Funag

Palestra: Tendências geopolíticas na América do Sul

O presidente da Funag e o Diretor do IPRI têm o prazer de convidar todos os interessados para a palestra, em espanhol, de Diego Solis, diretor para a América Latina da Stratfor, sobre “Tendências geopolíticas na América do Sul”.
O palestrante pretende fazer uma introdução das tendências geopolíticas e os desafios futuros para os diversos países da América do Sul, da Colômbia ao Brasil, dando ênfase à crise venezuelana e ao papel da China na região.
Diego Solis é mestre em geopolítica e segurança pela Universidade de Londres, fundador da Latam Image Consulting Group, com sede na Guatemala, e consultor independente especializado em riscos geopolíticos e no planejamento de cenários para investidores; trabalha com bases na Guatemala e em Austin, TX.
A Stratfor é a mais importante consultoria americana em inteligência geopolítica, analisando tendências, anomalias e projeções geopolíticas em diversos cenários do mundo contemporâneo.
A palestra será feita no Auditório Paulo Nogueira Batista, no Anexo II do Itamaraty, às 16:00hs da quinta-feira, 13 de outubro.

Mercosur: At the Mercy of Other Markets - Diego Solis (Stratfor)

Mercosur: At the Mercy of Other Markets
Diego Solis
Analysis SEPTEMBER 13, 2016
(Stratfor)

Summary
Editor's Note: This is the second installment of a seven-part series examining how the world's regional economic blocs are faring as the largest of them — the European Union — continues to fragment.

The Common Market of the South, better known by its Spanish acronym Mercosur, emerged in the early 1990s as a small bloc with a big goal: to ease the movement of people and goods throughout South America. The continent's leaders hoped that by bringing together South America's biggest economies, Brazil and Argentina, they could someday unite the entire Southern Cone. Much like France and Germany in the European Union, Brazil and Argentina have led their bloc since its inception, albeit unequally. (Because the Brazilian economy is notably larger than Argentina's, Brasilia has far greater clout within Mercosur than Buenos Aires.) By comparison, the economies of Mercosur's three remaining members — Venezuela, Uruguay and Paraguay — are too small or too specialized to claim much influence over the bloc's decision-making.

Given Brazil and Argentina's advanced economic development relative to their fellow Mercosur members, the distribution of power within the bloc is unlikely to change any time soon. The same cannot be said for Mercosur's policies. With demand from the bloc's largest buyers stagnating or declining, Mercosur members are pushing to open the traditionally protectionist trade union to new markets. But doing so would also risk inciting protests as local industries unaccustomed to external competition struggle to adapt, a pill few South American governments are eager to swallow. Even so, Mercosur will continue to mull the idea of liberalizing its policies in the coming decade, leaving the bloc's fate to fluctuations in commodity prices and regional trade in the meantime.

Analysis
Mercosur owes much of its design to South America's geography and the economic opportunities that arose from it. The sheer size of Brazil, for example, guaranteed it a prominent spot among the continent's economies, while terrain favorable to agriculture enabled Argentina to become an important part of international trade routes. Uruguay, located at the mouth of the Rio de la Plata, similarly used its trade advantages to industrialize rapidly. Yet to the north, landlocked Paraguay developed more slowly, hampered as it was by its landscape and inaccessibility.

Brazil’s Geographic Challenge
Isolated from the rest of the continent both geographically and linguistically and lacking internal cohesion, Brazil has traditionally been inward looking. Watch the video …

Geopolitics created the conditions for an economic partnership between Brazil and Argentina, but domestic politics dictated the institutional framework that shaped its formation. Starting in the mid-20th century, the two giants adopted a policy of import substitution industrialization (ISI), raising trade barriers to foreign goods entering the country in order to expand their own industrial bases and reduce their reliance on costly imports of inputs and finished products. In practice, Brasilia and Buenos Aires gave their domestic industries a chance to compete for a slice of the Brazilian and Argentine markets, and in some ways it worked. Several higher-value industries, such as the automotive sector, sprang up in both countries and were shielded from the most damaging effects of foreign competition.

Free Trade Gains Traction
But after a few decades, the ISI strategy had run its course. Though it had created domestic industries as Brazil and Argentina had intended, both nations still relied heavily on revenue generated by agricultural and mineral exports, which made them vulnerable to spikes and dips in commodity prices. Fiscal instability from the 1950s to the 1980s also made it more difficult for the Brazilian and Argentine governments to fund their ISI policies. Deep deficit spending led to occasional bouts of high inflation, and by the late 1980s, the two countries had begun to move away from the ISI approach altogether. In the wake of a sharp decline in the global commodities market and a series of Latin American debt crises, they began to search for a lifeline to bail out their sinking economies. The solution they settled on was freer trade, and they started to lower the barriers between their economies in the hope of striking an eventual trade agreement.

At the same time, the rest of the world's perception of trade was changing. Many protectionist countries, having encountered problems similar to Brazil's and Argentina's, began to weigh the virtues of free trade, and in 1991, Uruguay and Paraguay joined their larger neighbors to form the Mercosur customs union. Under the terms of membership, all four states agreed to lower tariffs and implement a common tax of up to 35 percent on certain imports. They also prohibited Mercosur states from signing preferential trade deals with other countries or blocs without first obtaining the unanimous approval of their fellow members. (Some notable exceptions were made for pre-existing trade agreements, including those between Mercosur members and Mexico.)

Pressure Builds
As an economic union, Mercosur has succeeded at more closely integrating South American economies, which historically have been focused overseas. In many ways this is unsurprising, considering the size and complexity of the two markets that anchor the bloc, and its members continue to coordinate their trade policies to some degree. Moreover, citizens of a full Mercosur member state can live and work freely throughout the bloc, so long as they do not have a criminal record. Political integration, however, has lagged. Though Mercosur was conceived as an organization that would someday develop political unity akin to that of the European Union, it has primarily functioned as a simple trade bloc.

But institutional changes are on the horizon. In the coming years, Mercosur will likely come to depend more on commodity exports, even in spite of the tighter industrial integration that trade among its members has encouraged. Brazil and Argentina have experienced considerable economic growth over the past two decades, much of which has been driven by China's rising demand for agricultural and mineral products — not for industrial outputs. Manufacturing's share of both economies has consequently fallen from 20 percent to 12 percent in Argentina and from 17 percent to 9 percent in Brazil since 1990. The erosion of these manufacturing sectors has made the effects of diminishing growth in Chinese demand for commodities all the more acute in recent years. This, combined with dwindling consumption, scandals and persistent economic troubles inside the bloc, has slashed Mercosur's overall growth.

This, in part, explains the need to diversify the bloc's trade options. Brazil currently accounts for the most trade and wealth within Mercosur. It absorbs one-fifth of Argentina's exports and contributes 42 percent of the bloc's gross domestic product. Free trade among it and other Mercosur members has proved beneficial to all parties involved, but it has also made them more vulnerable to downturns in one another's economies. Now that the "bust" portion of the commodities trade cycle has hit, Mercosur's members need to reach trade deals with other partners to revive their economies. But because those deals would first need to survive the lengthy process of gaining unanimous approval from other Mercosur states, they may not come soon enough.

Members will likely try to loosen the organization's restrictive regulations in the coming years. In fact, some nations have already begun to take steps to look for buyers abroad that could help bolster their manufacturing exports. Brazil and Argentina, for instance, are expanding their existing trade agreements with other Latin American states such as Mexico, while several of the countries' high-ranking officials have called for the bloc to relax trade restrictions on individual members.

Nevertheless, independently forging new free trade agreements with other states or blocs is not possible for Mercosur countries, at least currently. Members will continue to float the idea of liberalizing the bloc's trade agreement process, but making substantive progress on the issue would require the buy-in of every member and would likely take several years of negotiations. Actually implementing such changes, should they be passed, would create additional problems. Opening sectors that are currently protected by Mercosur's policies would undoubtedly harm some political constituencies, cutting into member governments' support bases and inciting protests across the bloc.

As Mercosur's de facto leaders, Brazil and Argentina will be at the forefront of any change that does take place in the bloc's trade deal policies, though the chances of one occurring in the immediate future are slim. Until then, the bloc's fortunes will continue to be determined by commodity prices and internal trade rather than by newfound access to the lucrative markets outside its borders.
--
Diego Solis
Latin America Regional Director
STRATFOR - Global Intelligence
P.O. Box 92529
Austin, Texas 78709-2529
Phone: 512.925.8631
 www.stratfor.com

Colombia: ganhos da paz? - Diego Solis (Stratfor)

Investing in a Possible Colombian Peace Deal
Analysis AUGUST 19, 2016 | 09:45 GMT 

Resolving the decadeslong conflict with the Revolutionary Armed Forces of Colombia (FARC) will provide Colombia with more investment opportunities. But investment, especially in mining and hydrocarbons, will still be limited for at least the next five years.
The process of demobilizing FARC forces will be inherently complex. That, coupled with falling global commodity prices, will keep the amount of foreign capital invested in Colombia from growing very quickly.
No matter who wins the next presidency, Colombia’s main geopolitical challenge will be to extend its control over rural areas and to connect them to the rest of the country. Until that happens, the growth of the mining, tourism, agribusiness and hydrocarbon sectors will be encumbered.

Analysis
Colombian President Juan Manuel Santos hopes by year's end to finalize a peace deal with the Revolutionary Armed Forces of Colombia (FARC) that would end five decades of conflict. The deal could open rural parts of Colombia for business, including for mineral extraction, tourism and agribusiness. But even if the peace agreements are implemented — they will be put to a public vote first — fostering the stability and trust needed to maximize industry will not be easy.

The Original Conflict
Since its founding in the mid-19th century, Colombia has been shaped by two competing ideological forces: conservative and liberal. As in most of Latin America, the conservatives were made up of the wealthy landed elite, who tended to believe in a strong central state that could protect their interests. The liberals, on the other hand, believed in a decentralized state and advocated higher international trade. In time, the conservatives emerged as the dominant political actors and remained so for more than a century — until liberal politician Jorge Eliecer Gaitan challenged the status quo.

Gaitan spent 20 years fighting for land reform and social inclusion in Colombia, but it was his assassination in 1948 that intensified the struggle in the country, ushering in the civil war known simply as "The Violence." The liberals and conservatives fought their battles in Colombia's hinterlands before eventually agreeing to a power-sharing agreement in 1958 that was backed by the Catholic Church and the country's commercial elites. Not everyone, however, was ready to settle the dispute or to lay down their arms. Liberal militia leader Manuel Marulanda, unhappy with the deal, aligned himself with the Communist Party and founded the FARC to continue fighting for the liberal cause.

Since then, the FARC and other rebel and paramilitary groups backed by competing groups and interests have fought vicious guerrilla battles with each other and with the government. There have been repeated attempts to disband the factions and to establish lasting peace, and some groups have been effectively dismantled. Coming to a peace agreement with the FARC, however, has proved difficult. But now, after four years of negotiations mediated by Cuba, FARC leaders and the Colombian government reached a deal. To be implemented and finalized, however, it must also be approved by the Colombian people. If the deal wins approval, Colombia's rural areas will become more accessible than they have been for the better part of a century, and Bogota will begin considering how it can attract foreign investment to the regions.


Open for Business
Colombia is an attractive market for investors in the extractive, agriculture and service industries. Though low global oil and commodity prices have hurt several Latin American countries, Colombia has grown by an average of 4 percent annually since 2000 and is forecast to grow by 3 percent this year, largely because it was able to secure ample contracts before the global economic downturn.

Colombia has undoubtedly suffered from low oil prices. Its oil exports decreased by more than 40 percent in the first quarter of this year compared with the same period last year. But because the hydrocarbon sector accounts for less than 5 percent of Colombia's gross domestic product, the economy was not completely devastated. As oil prices rise, Colombia will again become an important energy producer. In the meantime, low oil prices may actually help Colombia's future prospects.

State energy company Ecopetrol will continue to privatize to lower costs. Currently, Ecopetrol plans to auction 20 production assets, including its stake in regions such as Catatumbo, Llanos, Putumayo and in the Magdalena Middle and Upper valleys. In June, Ecopetrol raised more than $100 million by selling its stock in the Bogota Energy Co., and in May, Ecopetrol received a five-year, $300 million loan from Export Development Canada, representing about 50 percent of its 2016 budget. And because Ecopetrol's 2015-2020 strategy is to more efficiently and sustainably operate its assets, the company will likely continue to auction off other parts of its operations. In short, Ecopetrol will seek substantial investment in the next few years.

The mining sector, which accounts for about 2 percent of Colombia's GDP, has been particularly hurt by global economic trends. The industry had been accustomed to receiving billions of dollars worth of foreign direct investment. In 2015, however, that investment fell to less than $550 million. The decline is partly attributable to lower gold prices, but it is also linked to high infrastructure investments made over the past decade, which are one-time costs. Still, the news is not all bad. According to the Colombian Mining Association, production of gold was up by 18 percent — almost 3,700 kilograms (about 8,100 pounds) — in this year's first quarter compared with the same period last year.

In fact, gold production is helping bolster the sector against the decline of nickel and coal production, the country's most important minerals. In a global context this matters because, unlike coal and nickel, which are more inclined to global fluctuations, gold has largely maintained its value since mid-2013. As a result, once the FARC conflict ends, departments that have gold reserves will benefit, including Choco and Narino.

There will also be ample room for investment in Colombia's agriculture sector, which accounts for about 6 percent of GDP. According to one government report, 65 percent of Colombia's 11.3 million hectares of farmland is not used. The production of agricultural goods, including coffee, corn and poultry, is set to grow by double digits before 2020. This means that Amazonas, Antioquia, Cordoba, Valle del Cauca and Cundinamarca departments will benefit greatly from agribusiness-related investments and that Colombia is well poised to become one of the world's top food exporters.

Tourism is another sector ripe for foreign investment. Recent market research shows the industry grew by 16 percent in 2015. Bolstered by a weak peso and improved security overall, the tourism industry is expected to continue its expansion: In 2015, there were about 2 million international arrivals; by 2020, international visitors are forecast to increase to 3 million. Most of them will visit to take advantage of the country's health- and ecological-related tourism.

Limiting Factors
The investment landscape in a post-conflict Colombia will be limited by both short- and long-term problems. Dilapidated and inefficient infrastructure will constrain the hydrocarbon industry. The country's more than 8,000 kilometers (4,970 miles) of crude oil pipelines are inadequate to transport the approximately 1 million barrels per day of oil Colombia currently produces. The reliance on tanker trucks to transport crude will continue to reduce competitiveness, and the lack of development of the industry's supply chain will ramp up production costs, reducing profit margins. More important, besides being at the mercy of global oil prices, Colombia's harsh physical geography will limit any energy-related infrastructure projects, since the more difficult the terrain, the more expensive infrastructure becomes.

Oil exploration has also declined. According to the latest drilling report by the Colombian Chamber of Goods and Oil Services, at the end of June 2016, only 20 of Colombia's 210 oil rigs were active. The report warned that the country's oil reserves could dry up in the next 5 1/2 years. This is because substantial investment in the sector, and especially in exploration, is needed. Exploration has thus far been limited by conflict; though Colombia may officially be nearing a peace deal, it is no guarantee that the areas of possible exploration will actually become safer. Kidnapping, drug trafficking and other criminal activities could still hurt business, especially in Meta, Arauca, Putumayo and Narino departments.

Apart from safety concerns, criminal activity could dampen investment in other ways. Almost 90 percent — worth about $3 billion — of Colombia's gold production comes from illegal mining. And it is a problem across sectors. Recently, Colombian President Juan Manuel Santos tasked Energy and Mines Minister German Arce to fight illegal mining. The supreme court also just introduced a new mechanism to enable communities to report illegal mining operations and to require the verification of labor and environmental conditions before a mining license is awarded. This means that any foreigner willing to invest must have a holistic corporate social responsibility program in place, specifically when it comes to social inclusiveness policies, to reduce potential conflict with disgruntled communities. Otherwise, community-led sabotage will remain a risk.

The biggest challenge to the expansion of agriculture, aside from the high costs associated with land development, is the possibility of land reform, which is a term of the FARC peace deal. Thousands of displaced Colombians are demanding that their land, appropriated by guerrilla and paramilitary forces, be returned. Water scarcity will be another factor that agricultural companies will have to consider: The Magdalena and Cauca river basins support more than two-thirds of the country's population but contain only 13 percent of the country's available water. Inadequate infrastructure and uncertainty around how militia groups will dismantle will continue to be the most important limiting factors in the hospitality and management sector, reducing the places that tourists can visit.

Lead Analyst: Diego Solis
Latin America Regional Director

STRATFOR - Global Intelligence
P.O. Box 92529
Austin, Texas 78709-2529
Phone: 512.925.8631
diego.solis@stratfor.com | www.stratfor.com

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