LAA141030V7:Latin America Advisor.Qxd

www.thedialogue.org Thursday, October 30, 2014

FEATURED Q&A BOARD OF ADVISORS What Qualities Must a New OAS Secretary General Have? Diego Arria James R. Jones Director, Co-chair, The race to be selected as the candidates have action plans to do this Columbus Group Manatt Jones next secretary general of the work (and so would any other candidate). Global Strategies LLC Organization of American States Key member states, if they develop the Genaro Arriagada when José Miguel Insulza steps political will and smart diplomacy to work Nonresident Senior Craig A. Kelly Q down from that position next May after 10 with the new secretary general, can, issue by Fellow, Director, Americas Inter-American International Gov't years and two terms has already kicked issue, and starting with those that enjoy Dialogue Relations, off, with Eduardo Stein, a former vice pres- broad consensus, such as human rights and Joyce Chang Exxon Mobil ident of Guatemala, and Uruguayan infrastructure for development and securi- Foreign Minister Luis Almagro the two ty, show that the OAS can get things done. Global Head of John Maisto Emerging Markets Director, main candidates after Diego García Sayán Change will happen only with bold leader- Research, JPMorgan U.S. Education Finance of Peru, a judge with the Inter-American ship and risk-taking by a new secretary gen- Chase & Co. Group Court of Human Rights, withdrew his bid. eral who is not merely an employee of the W. Bowman Cutter Nicolás Mariscal How is the race shaping up? Where do the exclusive club of chief executives that the Former Partner, Chairman, candidates stand, and what factors should E.M. Warburg Continued on page 2 Grupo Marhnos be considered in selecting a new secre- Pincus tary general? What should the OAS aim to Thomas F. Dirk Donath McLarty III achieve under new leadership? Senior Partner, President, Aimara Capital LLC McLarty Associates John Maisto, member of the Jane Eddy Carlos Paz-Soldan Advisor board, director of U.S. Managing Director, Partner, Education Finance Group and for- Corporate & Govt. DTB Associates, LLP mer U.S. ambassador to the OAS: Ratings Group, A Standard & Poor's Beatrice Rangel "Two truisms about the OAS are 'if it did Director, not exist, it would have to be invented' and Marlene Fernández AMLA Consulting LLC the great Colombian Alberto Lleras' from Corporate Vice 1948 that 'the OAS will be what the mem- President for José Antonio Ríos Bolivia's Morales Retains Government Relations, Chief Executive Officer, ber countries want it to be.' Both are what Two-Thirds Legislative Majority Arcos Dorados Vadium Technology Inc. the 2015 secretary general election is all about. The member states have to decide if Bolivian President Evo Morales retained Peter Hakim Gustavo Roosen President Emeritus, they want real leadership, reform and gen- his two-thirds majority in the country's Chairman of the Board, uine strengthening to make the OAS rele- legislature in balloting earlier this month, Inter-American Envases Venezolanos Dialogue vant. Such change could be based on the election officials announced Andrés Rozental Donna Hrinak four pillars of OAS vision as recently Wednesday. In the Oct. 12 election, President, agreed-upon—democracy, human rights, Morales handily won a third term. See President, Rozental & Asociados Boeing Brazil and Senior Fellow, integral development and multidimension- story on page 2. al security. Real issues under each rubric Jon Huenemann Brookings Institution File Photo: Bolivian Government. can and should addressed. Both current Vice President, Everett Santos U.S. & Int'l Affairs, President, Philip Morris Int'l DALEC LLC Inside This Issue

Shelly Shetty FEATURED Q&A: What Qualities Must Argentine Lawmakers Approve Head, Latin America a New OAS Secretary General Have?...... 1 Changes to Hydrocarbon Laws...... 2 Sovereign Ratings, Fitch Inc. Bolivia's Morales Retains Brazil's Vale Posts Surprise Two-Thirds Legislative Majority ...... 2 Loss for Third Quarter...... 3 U.S. Official Participates in Brazil's Central Bank Boosts Meeting in Havana on Ebola ...... 2 Interest Rates in Surprise Move...... 3

NEWS BRIEFS Political News limit of one re-election for sitting presi- dents, but the country's Supreme Court Argentine Lawmakers Approve ruled that Morales was exempt because Changes to Hydrocarbon Laws Bolivia's Morales Retains his first term occurred before the The lower house of Argentina's Two-Thirds Legislative Majority Constitution's adoption. Morales has said Congress approved a revision of the that he is not considering running for a country's hydrocarbon laws 130- Bolivian President Evo Morales retained fourth term in 2019, but the Constitution his two-thirds majority in the country's could be amended with a two-thirds 116, with one abstention, to regulate legislature, meaning that he will continue majority in the legislature. Voters would shale and offshore oil and gas as the to be able to pass legislation with little also have to approve such an amendment. country looks to boost investment political opposition, election officials During his presidency, Morales has in the Vaca Muerta formation, announced Wednesday, Agence France- nationalized several industries, including Bloomberg News reported today. Presse reported. Morales' allies secured 89 oil, gas, telecommunications, mining and The bill, which was previously of 130 seats in the lower chamber and 25 water, AFP reported. Morales' govern- approved by the Senate, now of 36 seats in the Senate, according to the ment also has provided welfare grants for requires the signature of President Supreme Electoral Council. The elderly Bolivians, as well as children and Cristina Fernández de Kirchner and pregnant women. Bolivia's first indige- publication in the Official Gazette. nous president, Morales has also worked to empower indigenous and other mar- Brazil's Vale Posts Surprise Morales has said he's not ginalized groups. Bolivia is expected to Loss for Third Quarter planning on running for see 5 percent growth this year, after expe- Brazilian mining giant Vale today riencing growth of 6.8 percent last year, a fourth term in 2019. AFP reported. [Editor's note: See Q&A on posted a surprise loss for the third Bolivia's election in the Oct. 14 issue of quarter due to a weaker Brazilian the Advisor.] currency and lower commodity announcement of the official results came prices, Bloomberg News reported. more than two weeks after the country's U.S. Official Participates in Vale reported a loss of $1.44 billion, Oct. 12 national elections, in which Meeting in Havana on Ebola or 28 cents per share. That com- Morales won a third consecutive term in pared to a profit of $3.5 billion, or office. In power since 2006, Morales' new A mid-level official of the U.S. Centers for 68 cents per share, for the same five-year term lasts until January 2020. Disease Control and Prevention partici- period last year. Analysts had Morales was re-elected in a landslide, pated Wednesday during a two-day meet- expected the company to report securing 61 percent of the vote, the ing in Havana on Latin America's profit of 32 cents per share, Associated Press reported. The Bolivian response to the Ebola outbreak, the Bloomberg reported, citing the aver- Constitution adopted in 2009 created a Associated Press reported. The surprise age estimate of nine analysts. A Featured Q&A weaker Brazilian real has increased Continued from page 1 Vale's dollar-denominated debt, the company said. OAS has become. It would have to be Cynthia J. Arnson, director of backed by political determination of key the Latin American Program at Scotiabank to Invest $268 Million the Woodrow Wilson in Mexico Over Five Years member states that provide more than 90 percent of the OAS budget. Of this group, A International Center for Toronto-based Scotiabank said the United States, with deft diplomacy, Scholars: "Both Luis Almagro and Tuesday in a statement to Mexico's must be a prime mover, strategist and Eduardo Stein bring excellent credentials stock exchange that it will invest 3.6 catalyst. With such new momentum, a to the race for secretary general. But the billion pesos ($268 million) in bipartisan coalition in Congress could real issue is that the hemisphere is divid- Mexico over the next five years to provide badly needed increased funding, ed over the 'place' of the OAS among improve its operations and expand particularly if this is all backed by leaders multilateral fora in the region. It has its distribution network, Bloomberg at the Summit of the Americas next April been decades since the United States, in Panama. A tall diplomatic order, but deep in the Cold War, dominated the News reported. Scotiabank, Mexico's doable—with political will from the top. organization to advance its strategic and seventh largest bank by assets, also Without it, the OAS will be the 'same old' geopolitical goals, with Latin American said it will increase lending to ener- for the foreseeable future." governments for the most part dutifully gy projects up to as much as $10 billion over the next five years. Continued on page 4

Copyright © 2014, Inter-American Dialogue Page 2 of 4 Inter-American Dialogue’s Latin America Advisor Thursday, October 30, 2014 presence of Nelson Arboleda, the Economic News the central bank said the balance of infla- Guatemala-based director of the Central tion risks has worsened since policymak- American Regional Office of the CDC, ers' last interest rate meeting in was seen as a sign of the two nations' Brazil's Central Bank Boosts September. "In light of that, the commit- desire to work together to combat the dis- Interest Rates in Surprise Move tee considered it appropriate to adjust ease. "This is a global emergency, and we all have to work together and cooperate," Brazil's central bank on Wednesday Arboleda told reporters before the meet- boosted the country's benchmark Selic ing. "We'll make every effort to ensure the interest rate by a quarter point to 11.25 quick diagnosis of patients to break the percent, surprising analysts, Reuters The central bank hiked the cycle of transmission." The gathering was reported. The rate hike was a split deci- called by the ALBA bloc, a grouping of sion with five of the bank's eight board benchmark rate in a 5-3 vote. left-leaning countries that was formed as members voting to hike the key rate and a counterweight to the other three voting to keep it U.S. influence in the unchanged. All 43 economists in a region. Cuba sent at Reuters poll earlier this week expected the least 256 medical central bank to keep the Selic on hold at monetary conditions in order to guaran- workers to West 11 percent. Analysts had expected the tee, at a lower cost, the prevalence of a Africa this month to bank to hold off on rate changes until more benign inflation outlook in 2015 help fight the out- newly re-elected President Dilma and 2016," the bank said. Inflation has break, a move that Rousseff announces policy changes. In a been at the top end of the central bank's drew rare praise for statement accompanying the rate hike, 2.5 percent to 6.5 percent target range. Arboleda Cuba from the File Photo: CDC. United States. U.S. Secretary of State John Kerry and the U.S. ambassador to the United Nations, From the Archives Samantha Power, both praised Cuba for sending the medics. Also, Washington's In case you missed top diplomat in Cuba last week attended a briefing on the disease that Cuba's Q&As on trade in past health and foreign ministries held for the diplomatic corps in Havana. Arboleda editions of the Advisor... said this week's meeting in Cuba would focus on training doctors "in order to Are the Trans-Pacific Partnership Talks ensure an appropriate response to the in Danger of Collapsing? Aug. 4 possible introduction of the Ebola virus in our region." Thirty-two nations sent Will Mercosur and the Pacific Alliance more than 200 delegates in all to the Strengthen Ties? Oct. 2 meeting, said Cuban Health Minister Roberto Morales Ojeda. Canada, Mexico, Why Has Dispute Resolution Become Brazil and Panama, none of which are Such a Hot Topic? Aug. 25 members of ALBA, were among those sending representatives. "In the context of How Will a Fight Over Sugar Affect so much discussion, public and private, U.S.-Mexico Trade Ties? Sept. 10 about opportunities for the U.S. to do things in its own interest that involve How Critical Is the TPP for Latin Cuba directly, there's an irreproachable American Countries? May 19 logic" about U.S. participating in the meeting, Julia Sweig, a Cuba expert at the What Are the Best Options for Council on Foreign Relations, told the AP. Modernizing NAFTA? Jan. 6 "I think it demonstrates a degree of prag- matism and seriousness that is appropri- Subscribers can access the full archive ate to the crisis at hand. [Editor's note: at http://advisor.thedialogue.org See Q&A on Ebola in Wednesday's Advisor.]

Featured Q&A Continued from page 2 Latin America Advisor falling into line. But this caricature, along tion's credibility, as well as tend to need- is published every business day by the with the discourse of U.S. control, serves ed structural reforms. The candidates Inter-American Dialogue, Copyright © 2014 the interests of those most hostile to the thus far, Eduardo Stein of Guatemala and Erik Brand OAS' democracy and human rights man- Luis Almagro of Uruguay, would bring Publisher dates—those in the ALBA bloc—who different profiles to the job. Stein has led [email protected] actively sought to gut the Inter-American two sensitive OAS missions to Peru and Gene Kuleta Commission on Human Rights in the Honduras and will likely appeal to those Editor name of reforming its mandate. Perhaps who note that the venerable organization [email protected] just as uninterested in a vigorous OAS is Megan Cook Brazil, which seeks to exercise leadership Reporter, Assistant Editor in South America through the Union of [email protected] South American Nations (UNASUR). “ The new leader must combine Some in the U.S. Congress have also been Inter-American Dialogue less than helpful, using U.S. financial con- energy, creativity and principle to tributions unilaterally to leverage if not rebuild the organization's Michael Shifter, President dictate reform. This has further under- Peter Hakim, President Emeritus mined the one regional organization to credibility, as well as tend to Genaro Arriagada, Nonresident Senior Fellow which the United States still belongs. needed structural reforms. Much is needed to bolster the OAS' cred- ” Sergio Bitar, Nonresident Senior Fellow ibility. A new secretary general must 1) — José R. Cárdenas Joan Caivano, Director, Special Projects streamline the organization's strategic Maria Darie, Director, Finance & Administration focus (the recent internal process that led Ariel Fiszbein, Director, Education Program to the articulation of 'four pillars' still Claudio Loser, Senior Fellow contains dozens of mandates, not all of has never been led by a representative Nora Lustig, Nonresident Senior Fellow which are suited to the organization); 2) from Central America or the Caribbean expand financial contributions beyond (with the exception of Costa Rica briefly). Margaret Myers, Director, China and Latin America Program the four counties that currently con- Almagro, who already has the support of tribute the lion's share of the budget; 3) Southern Cone countries, will likely court Manuel Orozco, Senior Fellow reconcile the principle of non-interven- other diplomatic heavyweights to offset Jeffrey Puryear, Senior Fellow tion with the defense of the practice of Stein's appeal to smaller countries. Both Lisa Viscidi, Director, Energy Program democratic governance; and 4) stream- candidates will likely steer clear of line the OAS' administrative and man- endorsements from the United States and Latin America Advisor is published every agement structure, putting efficiency and Venezuela for fear of creating a backlash. business day, except for major U.S. holidays, by quality in the forefront of OAS opera- The OAS is at a critical moment in its his- the Inter-American Dialogue at: tions. Current Secretary General José tory in that it must recover its place as the 1211 Connecticut Avenue NW, Suite 510 Miguel Insulza has frequently observed preeminent regional body. It requires an Washington, DC 20036 that the OAS reflects the interests of its adept diplomat who can build consensus Phone: 202-822-9002 Fax: 202-822-9553 www.thedialogue.org ISSN 2163-7962 member states. How many of them on difficult issues, but who also has a would tolerate a shake-up?" keen understanding of the inter- Subscription Inquiries are welcomed at American system to accentuate the OAS' [email protected] José R. Cárdenas, associate at positive contributions while mitigating The opinions expressed by the members of the Visión Américas: "The next sec- its weaknesses. Lastly, that individual will Board of Advisors and by guest commentators do retary general will face daunt- need to be buttressed by renewed engage- not necessarily represent those of the publisher. The ing challenges, primarily result- ment by key member states, including the analysis is the sole view of each commentator and A does not necessarily represent the views of their ing from the disappointing tenure of United States." respective employers or firms. The information in Secretary General Insulza, which has left this report has been obtained from reliable sources, the organization at its nadir in terms of but neither its accuracy and completeness, nor the opinions based thereon, are guaranteed. If you have relevance and without solutions to long- The Advisor welcomes reactions to the any questions relating to the contents of this publica- standing administrative issues. The new Q&A above. Readers can write editor tion, contact the editorial offices of the Inter- leader must combine energy, creativity Gene Kuleta at [email protected] American Dialogue. Contents of this report may not be reproduced, stored in a retrieval system, or trans- and principle to rebuild the organiza- with comments. mitted without prior written permission from the publisher.