South America Inc
Trade
The Political Entanglements of Colombia's Trade Partners
From Universia-Knowledge@Wharton
Relations between Colombia and its main trading partners aren't what they are cracked up to be. Now a new friction — caused by a bilateral agreement allowing U.S. troops to use up to seven military bases in Colombia — sparked a heated debate among regional heads of state during the August 31 summit of the Union of South American Nations (or UNASUR) in Bariloche, Argentina.
For Colombia, the agreement has great significance after years of being plagued by "narcoterrorism," the phrase coined in the 1980s referring to the close collaboration between the country's drug traffickers and the Marxist-Leninist guerrillas of the Revolutionary Armed Forces of Colombia, or FARC. Colombian officials hope that the U.S.'s military presence will help it end narcoterrorism, while their American counterparts hope to stop illegal drugs from coming across its borders from southern neighbors like Colombia. But for countries such as Venezuela and Ecuador, the agreement is yet another act of U.S. interference in the region.
According to Rafael Pampillón, professor of economics at the IE Business School in Spain, the U.S. military presence will be a case of a "powerful army advanced in military strategy that can help strengthen the operational capacity of Colombian troops." Meanwhile, Ramón Guacaneme Pineda, assistant dean of EDE, the business school at Colombia's Sergio Arboleda University, sees the military presence as largely an additional deterrent, which could help bring everyone involved in the conflict to the negotiating table. "Relying on the use of arms does not resolve any problems per se," he explains. "What it does, however, is force the two sides in the conflict to [see] that the way [they have been approaching the problem] is impossible [and that] they need to try other ways of doing things."
The agreement between Bogotá and Washington, D.C., has been particularly vexing for Venezuela's president, Hugo Chávez, the leading anti-American voice among Latin American politicians who has won the support of Ecuador, Bolivia and Argentina. As Pampillón explains, Chávez would like nothing more than to extend his "Bolivarian revolution" to other parts of South America. Yet there's no avoiding the fact that Venezuela shares a border with Colombia, stoking his concerns of a military invasion by its neighbor and espionage by U.S. troops from bases in Colombia. >>>>Go to Full Story >>>
Auto Manufacturers Race for Bolivia’s Lithium Reserves
From Universia Knowledge@ Wharton
Recently, Bolivia has become the nerve center of Latin America, attracting the interest of several multinational companies. The reason: The world's largest reserves of lithium are in this country, in the Salar (Salt Flats) de Uyuni.
Located in the Potosi region in the southeast of the country, 3,500 meters above sea level, the Salar de Uyuni holds five million tons of lithium, a mineral that is required for manufacturing batteries for hybrid and electric cars. The region represents an attractive investment option for global automotive manufacturers who are trying to break their dependence on petroleum and produce more fuel-efficient products.
Aware of the positive effects that the industrialization of lithium would have on the automotive sector and the local economy, Morales has declared his intention to engage in a partnership with some multinational firm. However, given the unusual amount of interest awakened by the mineral at Uyuni, Morales – who has already nationalized the local petroleum and natural gas industries — declared that "the goal of the Bolivian government is to exploit lithium on a grand scale" and that the government "will never lose ownership of its natural resources," according to the daily newspaper El Diario de Bolivia.
Given that fact, John Tilton, a professor in the Catholic University of Chile's mining division, warns that "the actions of the government and its policy for foreign investments in Bolivia will be the determining factors, and they could drive multinationals to invest in Chile or in other countries in Latin America if Bolivia does not offer the appropriate climate for investment."
"There are deposits of lithium in Chile and Argentina, and a promising deposit in Tibet," notes Oji Baba, an executive in Mitsubishi's Base Metals Unit. "But it is clear that the biggest prize is in Bolivia. If we want to lead the next wave of lithium-based automobiles, we have to be in the Salar de Uyuni." >>>>Go to Full Story >>>
