Latin America

  • Latin America's Drop Out Crisis

    It is estimated that between now and 2040, nearly 40 percent of Latin America's labor force will lack even a high school degree – much less, any advanced academic or professional training. This is a major challenge in a century whose economic winners are being defined by the ability to innovate, adapt, and leverage advanced human capital. Without a strong foundation in both "hard" and "soft" skills, how will the region be able to move to the next stage of development, based on technology, increased productivity, and entrepreneurship?

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  • Mapping a New Era for Latin America, the United States, and Europe

    President Obama's trip to Mexico and Costa Rica has put Latin America back at the center of Washington's foreign policy debate, for a few days at least. The visit comes at a time when Secretary of State John Kerry has not yet visited the region nor given any important speech on Latin American affairs. It remains unclear whether the Administration will offer any new vision for US relations with Latin America, after four years of relative absence.

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  • Forging a Trilateral Bond: Solving the Transatlantic Problem by Expanding It

    "If the United States and Europe are to remain competitive—economically, politically, and strategically—in this increasingly multipolar world, they must reach out to partners who share their values and can contribute to a stronger transatlantic economy. That partner is Latin America."
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  • The Trilateral Bond: Mapping a New Era for Latin America, the United States, and Europe

    The Adrienne Arsht Latin America Center today released a report advocating that Latin America, North America, and Europe should build a stronger, more equal trilateral partnership based on a community of shared interests and values. The report by the Transatlantic Task Force on Latin America—co-chaired by former Prime Minister of Spain José María Aznar and former Senator Christopher J. Dodd—specifically argues for building an open transatlantic marketplace and initiating a stronger resource partnership through the launch of comprehensive trilateral dialogues on trade and investment and energy.

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  • Building BRICS

    BRICS country flags

    They represent 25.9 percent of the world’s land mass, 43 percent of the population and 17 percent of global trade. The UN Development Program states that by “2020, the combined economic output of three leading developing countries alone Brazil, China, and India–will surpass the aggregate production of Canada, France, Germany, Italy, and the United States.”

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  • Roundtable on Argentina with Buenos Aires Cabinet Chief

    On Friday, March 15, the Atlantic Council’s Transatlantic Relations Program hosted an off-the-record roundtable discussion with Buenos Aires Cabinet Chief Horacio Rodriguez Larreta. The event was part of the Atlantic Council’s new initiative to explore Latin America’s role in the transatlantic relationship alongside Europe and the United States.
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  • What the Cuban Missile Crisis Teaches Us About Iran

    Bob Schieffer of CBS News struck the right note when he opened this week’s presidential debate on foreign policy by reminding viewers it was “the 50th anniversary of the night that President Kennedy told the world that the Soviet Union had installed nuclear missiles in Cuba, perhaps the closest we’ve ever come to nuclear war.” He called it “a sobering reminder that every president faces at some point an unexpected threat to our national security from abroad.”

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  • Transatlantic Task Force on Latin America

    On September 12th and 13th, the Atlantic Council held the first meeting of its Transatlantic Task Force on Latin America, a brand new initiative at the Council co-chaired by former Prime Minister of Spain Jose Maria Aznar and Senator Christopher Dodd, with Atlantic Council Board Director Adrienne Arsht as honorary chair.

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  • A Roundtable with Maria Corina Machado

    On June 7, 2012 the Atlantic Council’s Transatlantic Relations Program hosted an off-the-record roundtable discussion with Maria Corina Machado, Venezuelan opposition leader and member of the National Assembly.

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  • Argentina before the Law

    Argentine President Cristina Fernández de Kirchner’s decision to renationalize the energy company YPF has raised a virtual tsunami of political diatribes, threats from unexpected places and players, heated commentary from journalists worldwide, and public outrage in Argentina, Spain, and many other countries. But Fernández is not likely to care about the complaints; renationalization is playing very well with her Peronist supporters at home.

    So now Argentina will face international law. In addition to Repsol, the Spanish energy company that held a majority stake in YPF, Spain and the European Union (which, under the Lisbon Treaty, has acquired authority regarding investment matters in third countries) will fight the seizure with every legal tool that they can muster.

    Argentina stands to lose economically by its actions as well. Given Fernández’s contempt for her country’s largest foreign investor, the renationalized YPF will find it difficult to find a new partner in international markets. Indeed, given Fernández’s arbitrary action, the Chinese firms that were negotiating with Repsol for a stake in YPF are likely to have second thoughts.

    In the end, a solution must be found that is acceptable to all. So allowing tempers to cool and rhetoric to soften is now a high priority, and there is no better way to do that than by switching on the legal machinery. Repsol’s announcement that it will seek international arbitration before the International Center for Settlement of Investment Disputes (ICSID) is a useful first step.

    But Repsol’s willingness to go to arbitration raises several questions for members of the general public, most of whom are unfamiliar with the workings of international law (which are sometimes incomprehensible even to experts). What does it mean to resort to the ICSID? How effective are its decisions when rendered against states?

    The ICSID was established in 1965 as a part of the World Bank by the Convention on Differences Relative to Investments between States and Nationals of Other States, in response to the proliferation of requests for the Bank president’s ad hoc mediation in investment controversies. Its greatest virtue is that it offers two means of resolving controversies, conciliation and arbitration, in a process that places states and investors on an equal footing.

    Historically, ICSID arbitration has enjoyed a high degree of acceptance by all parties to disputes. Undoubtedly, in addition to formal means of implementation, the impressive shadow of the World Bank, with its powerful influence over developing countries’ access to international markets, plays a key role. But, today, with more players able to set themselves up as an alternative to the World Bank, this influence has begun to dissipate, at least in some cases.

    Over the past 15 years, since the first case was registered against a Latin American state (Costa Rica) in 1996, the number of investment arbitrations submitted to the ICSID from the region, mainly by foreign investors, has soared. Indeed, Latin America now accounts for nearly half of the ICSID’s caseload.

    Argentina is, by far, the leading cause of the regional surge in investment disputes, accounting for roughly 25% of all ICSID cases, 50% of those originating in Latin America, and twice as many as any other country. Indeed, since 1996, Chile has been a party in only three cases, and Peru in fewer than 10.

    Of course, it would be best if the dispute between Repsol and Argentina could be resolved by negotiation. But if precedent means anything – and it generally does – there is not much hope that the parties will resolve this case by direct agreement. So, once again, Argentina will stand out among that small group of countries that are reluctant to comply with legal custom, if not with legal findings.

    Argentine leaders’ addiction to demagogic and populist behavior is one reason for the country’s exceptionalism in this regard. So, once again, that behavior must be censured, not only by other leaders, but also in legal proceedings. Only rigorous adherence to law can discourage the populist temptation to seek shortcuts to solving problems.

    Investments and loans are two sides of the same coin; they flow only to where they are offered the security of a legal framework that prevents political leaders from exercising power arbitrarily. Because autarky is not an option – not even for North Korea – capricious decisions such as the renationalization of YPF cause immeasurably greater harm to the states that adopt them. It is no coincidence that the world’s most prosperous countries are those with the strongest institutions, the most predictable business climate, and a reputation for upholding the rule of law.

    Ana Palacio is a former Spanish foreign minister, former senior vice president and general counsel of the World Bank, and current member of the Atlantic Council's Board of Directors. This essay originally appeared on Project Syndicate.

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