US's "BFF" in LatAm

Santi Lopez | Nov 14, 2011

Shifting Political Alliances

During the last decade the governments of several northern South American countries have reestablished their position on the political spectrum. As a result, some of the previously favored trade nations have been replaced with new ones.  


The most dramatic shift has taken place in Venezuela, a relatively small country of less than 25 million, but a former commercial hub for US multi-nationals poised to grow throughout the Andean region. Many outsiders argue that concentrating the wealth generated from petroleum, a resource accounting for 85% of Venezuela’s GDP, among only 3% of the population, led to the rise of the infamous military leader, Hugo Chavez.


Chavez’ visions of grandeur have locked his focus on one objective—to reclaim the northern region of South America and rename it ‘El Gran Colombia’, as the original liberator, Simon Bolivar aspired to do several centuries ago. In the short term, Chavez has managed to redistribute the wealth to the poorest class, but this move has resulted in a mass exodus of wealthy families. His hard-line, socialist posture has also alienated the U.S. and driven out many US and European, multi-national Andean headquarters.


Broader Regional Trends

Moving towards the right on the political spectrum, we find the governments of Bolivia and Ecuador. Rafael Correa of Ecuador joined Chavez in 2009 in a Military stand-off against Colombia by placing his soldiers and tanks along Colombia’s southern border, while Chavez positioned his on Colombia’s northern front. Bolivia’s president, Evo Morales also leans left, but has been very effective in resolving some critical, in-country energy issues so his popularity remains high.


Finally, ‘right-of-center’ Colombia is emerging as America’s best friend in the Andean region. In fact, after Israel and Egypt, Colombia receives more financial and military support from Uncle Sam than any other country on the planet. Two consecutive terms from President Alvaro Uribe led to a relatively easy election of his Vice President, Juan Manuel Santos, who has continued to carry the torch on the fight against Colombia’s subversive guerilla movement. Only days ago, the Colombian military was credited with removing Alfonso Cano, architect and undisputed leader of the FARC—the most notorious leftist organization in Colombia.


Entry Points & Risk Management

A properly built strategic plan for exporting to Latin American countries will consider both the "snapshot" as well as the trends.  Risks of nationalization, currency dislocation and punitive trade restrictions are examples of points to consider.  The recent FTA with Colombia, combined with the encouraging situation there make it a good market to consider in its own right and as a stable base from which to pursue broader South American opportunities.


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