Latin America 2007: Best
& Worst
2007 was a year when
politics - especially
Hugo Chavez - dominated
much of the business
news out of Latin
America. However, there
were also other key
events during the year.
Latin Business Chronicle
singles out the five
best and five worst
events of the year.
FIVE BEST EVENTS
Bovespa's IPO. On
October 24, 2007, the
Sao Paulo stock exchange
Bovespa launched its own
IPO, raising a whopping
$3.7 billion. That was
the largest IPO ever in
Brazil, which has seen a
wave of IPO's the past
few years.
Mexico Reforms.
Mexican President Felipe
Calderon spent his first
year implementing tax
and pension reforms,
announced a $250
billion, five-year
infrastructure plan and
launching an aggressive
campaign to boost
security. The measures
will benefit Latin
America's second-largest
economy and the top U.S.
trade partner in the
region. (See Leader of
the Year: Felipe
Calderon).
Ecopetrol IPO. On
September 25, Colombia's
state oil company
Ecopetrol completed its
first round of IPO,
raising $3.3 billion.
That's the country's
largest IPO ever and the
second-largest in Latin
America in 2007.
Costa Rica's CAFTA
Approval. On October
7, 2007, a slim majority
- 51.6 percent - voted
in a referendum to
approve the country
joining CAFTA. A no vote
would have been a major
blow to the country's
pro-business president
Oscar Arias and sent a
negative signal to
foreign investors. With
CAFTA, Costa Rica will
open its telecom and
insurance sectors to
competition (See Costa
Rica & CAFTA: What
Next?).
Panama Canal
Expansion. On
September 3, 2007, the
Panama Canal officially
held the groundbreaking
ceremonies for the
historic $5.2 billion,
multi-year expansion
program aimed at making
it more competitive.
U.S.-Peru FTA Signed.
On December 14, 2007,
President George W. Bush
signed into law the
U.S.-Panama free trade
agreement after it had
been approved by the
U.S. Congress in
November and December.
The FTA approval follows
nearly two years of
delays in getting
approval from U.S.
lawmakers. The approval
spurred optimism that
the U.S. Congress would
follow in 2008 with
approvals for the
Colombia and Panama
FTA's as well.
FIVE WORST EVENTS
Nationalization of
CANTV and EDC in
Venezuela. On
January 8, 2007,
President Hugo Chavez
announced that he
planned to nationalize
the telecom company
CANTV and electricity
company EDC, the two
largest private
companies in the
country. The news were
seen as the latest
examples of Chavez'
plans to implement a
socialist economy at the
expense of private
companies and foreign
investors.
Colombia FTA Delay.
The U.S. Congress
failed to approve the
U.S.-Colombia free trade
agreement during 2007
despite strong support
from U.S. companies like
General Motors and
Coca-Cola and former
Clinton Administration
officials like White
House chiefs of staffs
Leon Panetta and Thomas
"Mack" McLarty. The
pact, reached in
February 2006, is seen
as far more important
for U.S. exports than
the U.S.-Peru free trade
agreement lawmakers did
pass towards the end of
2007.
Ecuador's
Radicalization. As
if Ecuador couldn't get
worse, President Rafael
Correa decided to spend
his first year in power
attacking everyone from
foreign oil companies to
opposition lawmakers.
Among other things, he
hiked oil royalties to a
whopping 99 percent,
prompting a series of
disputes with foreign
oil companies (See
Ecuador Oil: More
Trouble Ahead). The
result? Falling oil
production and one of
the weakest GDP
expansions in Latin
America.
Nicaragua's
Radicalization.
Although he had vowed
not to return to past
policies that spurred
capital flight, hyper
inflation and economic
recession, Nicaraguan
President Daniel Ortega
spent most of his first
year trying to scare
away foreign investors.
The worst case was the
August 18 confiscation
of a fuel-storage
terminal owned by
ExxonMobil. (See
Nicaragua Confiscation
Illegal, Unsafe). The
terminal was later
returned to the company,
but the government said
it wanted to negotiate a
permanent solution
allowing it to use the
terminal to store
Venezuelan oil.
Meanwhile, Ortega
continued his attacks
against Spanish energy
company Union Fenosa, at
one point likening the
company to the mafia and
accused it of using
"gangster methods" and
corruption. (See Dealing
With Latin Populists).
Treatment of Botnia.
The Finnish pulp company
only wanted to build a
$1.2 billion mill in
Uruguay (the country's
largest foreign
investment ever), but
has had to face a wave
of problems, mostly
caused by Argentina's
government and Argentine
environmental activists
who claim the mill will
contaminate despite
assurances from The
World Bank,
international experts
and Uruguayan
authorities of the
opposite. On November
12, 2007 the company
started its first
production, but on
December 10, Argentina's
new president Cristina
Fernandez signalled that
she planned to continue
with the harassments.
And a few weeks later an
Argentine judge demanded
that four key Botnia
officials present
testimony in a new legal
suit against the company
brought by an Argentine
province. (See Finally!
Botnia Starts
Production). |
