Risk Radar 2011: How firms are navigating risk

by Christopher Watts for The Economist Intelligence Unit, March 22nd, 2011.

Risk Radar 2011 is an Economist Intelligence Unit report that investigates the key risks business executives are facing in 2011, and the ways in which firms are addressing these risks. The report is sponsored by RBS. The Economist Intelligence Unit bears sole responsibility for the content of this report. Our editorial team executed the online survey, conducted the interviews and wrote the report. The findings and views expressed in this report do not necessarily reflect the views of the sponsor.

Our research for this report drew on three main sources:

• We conducted an online survey of 275 executives from around the world between October and November 2010. The survey included companies from a range of industries.
• To supplement the survey results, the Economist Intelligence Unit conducted a programme of qualitative research that included a series of in-depth interviews with industry experts.
• We also drew on the latest global and country-level risk analysis from the Economist Intelligence Unit’s Global Forecasting Service, which is now freely accessible at http://gfs.eiu.com/

Download the full report here.

China’s ICBC linked to Standard Bank Argentina

by Jude Webber and Richard Stovin-Bradford for Financial Times – Beyond Brics, March 21st, 2011.

China burst into Argentina in a big way last year, snapping up joint control of the country’s second biggest oil producer, Pan American Energy, in the biggest deal Argentina has seen in a decade. It also grabbed the local unit of Occidental.

Beijing also agreed to back railway projects in Argentina to the tune of $12bn. China’s other interests in Argentina include iron ore, gold, soya, fertiliser and electronics. While Argentina’s heterodox policies have put many investors on the back foot, China has made Argentina its third-biggest investment destination.

Could that investment appetite now extend to banking?

ICBC, China’s biggest bank by market capitalisation and already the holder of a 20 per cent stake in the South Africa’s Standard Bank, is sniffing around at the possibility of buying the bank’s Argentine unit, according to media reports (see here and here).

The bank used the slogan “Moving Forward” as part of its advertising campaign as the official sponsor of the Argentine soccer team, but has said nothing publicly about any plans to move on itself. (continue reading… )

 

A state of insecurity

by Americas View – The Economist, March 22nd, 2011.

Nearly four months after the release of the first Wikileaks cables, it is surprising that the second ambassador to lose his job over the affair should be Carlos Pascual, Washington’s man in Mexico City. Mr Pascual, who had been in the job for little more than a year and a half, resigned on Saturday. Hillary Clinton, the United States’ secretary of state, said that he had stepped down “to avert issues raised by [Mexico’s president, Felipe Calderón] that could distract from the important business of advancing our bilateral interests.” By that she meant Wikileaks.

The Mexico City cables were in fact milder than most. The only other ambassador to have been removed following the leaks so far is Gene Cretz, head of the embassy in Tripoli, whose cables detailed Muammar Qaddafi’s reliance on a “voluptuous” Ukrainian nurse and described his fear of flying and love of flamenco dancing. Diplomats in Ottawa wrote that Canadians “always carry a chip on their shoulder”, partly because they think their country “is condemned to always play ‘Robin’ to the U.S. ‘Batman’.” The ambassador there survived. By contrast, Mr Pascual’s missives were pretty dry.

But his frank assessments of Mexico’s misfiring drug war and the uninspiring senior members of Mr Calderón’s National Action Party (PAN) were apparently too much to bear. Mr Calderón had made clear for several weeks that he believed Mr Pascual should go, publicly criticising his “ignorance”. Some of the PAN’s would-be presidential candidates were deeply miffed by Mr Pascual’s private comment that they were mostly rather “grey”. Following Mr Pascual’s resignation the labour secretary, Javier Lozano, posted a sarcastic message on  Twitter: “How we will miss him. Pascual had such a good eye for evaluating the candidates of the PAN.” (continue reading… )

 

Obama Visit, a Boost for Piñera

by Kenneth Bunker for Americas Quarterly Online, March 21st, 2011.

President Obama’s visit to Chile coincides with President Piñera’s completion of the first year of his four-year term. Although his administration has been highly effective at rebuilding the massive damage of the 2010 earthquake and tsunami, Piñera’s approval ratings are at their lowest level yet. Almost immediately after being sworn in, Piñera took a hit in the polls.

The unnecessary delay in selling two of his most emblematic companies (a television station, CHV, and LAN Airlines) sparked debate on potential conflicts of interest. Although he was able to regain some support after the successful rescue of the trapped miners, a popular revolt triggered by the decision to raise natural gas prices in the south sent approval ratings in a downward trajectory.

Though Piñera later sold his companies (or provisionally signed them over to non-profit organizations) and promptly announced that gas prices would only marginally increase, several other minor unforced and unpopular decisions have underscored his first year in office. Some of these errors can be attributed to the difficulties of running a country ruled by the opposition for the past 20 years. But others should be understood as part of Piñera’s natural entrepreneurial character, which naturally entails a certain amount of risk-taking. (continue reading… )

 

President Obama Hails Chile as Model “for the Region and for the World”

by Nina Agrawal for Americas Quarterly Online, March 21st, 2011.

Speaking to the Chilean and Latin American public from the La Moneda presidential palace in Chile, President Obama signaled the start of a new era in U.S.-Latin America relations—one whose focus will be on enhancing security in the region, promoting inclusive development, strengthening democratic institutions, and securing sustainable energy resources. On the eve of the 50th anniversary of President Kennedy’s creation of the Alliance for Progress and amid political turmoil and regime change in the Middle East and North Africa, President Obama’s speech to the Latin American public was both symbolic and significant.

It is no secret that the U.S. administration supported—and even lent assistance—to the forces that overthrew Chilean president Salvador Allende’s democratically elected government in 1973 and installed a military regime with General Augusto Pinochet at its head. This is a part of Chile’s history with which the country continues to come to terms, serving justice to the victims of the regime’s human rights abuses.

In a joint press conference with President Piñera, Obama was asked by a reporter about the U.S.’ past role in Chilean affairs. He answered without missing a beat: “It is important for us to understand our history, and to learn from our history,” he said, but “we are not trapped by our history.” (continue reading… )

Speech in Santiago: Obama Talks “New Era of Partnership”

by Carin Zissis for Americas Society / Council of the Americas, March 21st, 2011.

Fifty years after John F. Kennedy unveiled the “Alliance for Progress,” U.S. President Barack Obama invoked its memory during a speech in Santiago. While Kennedy’s 1961 program involved aid for development in Latin America, Obama’s March 21 speech from La Moneda Palace called it “a region on the move, proud of its progress, and ready to assume a greater role in world affairs.” The president called for a “new era of partnership” with Latin America and outlined a broad range of areas for cooperation—from energy to education to security. “With no other region does the United States have so many connections,” said Obama. “We are all Americans. Todos somos americanos.”

“So this time the dialogue is more symmetrical,” write Chilean co-founders of Jóvenes Líderes in an AQ blog post about Obama’s Santiago visit and address about the Americas. In an address expected to be of regional importance along the lines of the 2009 remarks he delivered in Cairo, Obama focused on education and innovation, promising two new initiatives. One will bring 100,000 Latin American students to the United States in an exchange program that involves the same number of U.S. students in Latin America. The second will “harness the power of social media and online networks to help students, scientists, academics, and entrepreneurs collaborate.”

Obama’s address also reflected on topics discussed with Chilean President Sebastián Piñera. The two leaders spoke earlier in the day of efforts to promote the Trans-Pacific Partnership, a free-trade alliance under negotations and involving nine countries (Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam). Obama noted that the bilateral U.S.-Chilean free-trade pact has led to more than a doubling of trade between the two countries and announce that intellectual property rights would be included in that accord. He congratulated Chile on its economic and democratic progress. (continue reading… )

In Rio, Obama Describes Brazil as Democratic Model

by Carin Zissis for Americas Society / Council of the Americas, March 20th, 2011.

n a speech delivered before a Rio de Janeiro audience, President Barack Obama highlighted Brazil as a country that grew from a dictatorship to a “flourishing democracy.” Although a second day of allied strikes against Libya threatened to overshadow Obama’s first South American trip, the president pointed to unrest in the Middle East and North Africa as a step in the process toward creating open societies, just as Brazil has already experienced. He pointed out that Brazilian President Dilma Rousseff is a former guerilla who fought her country’s dictatorship in the 1960s. “That is the example of Brazil,” said Obama. “Brazil—a country that shows how a call for change that starts in the streets can transform a city, transform a country, transform a world.”

Obama, who pledged to return to Rio for the 2016 Olympics, congratulated the South American country as “an equal partner” with a common history of African heritage. He added that Brazil, often painted as “a country of the future,” is now a place where “the future has arrived.” Just as he called Brazil a model for the Arab world, he also described it as a partner in supporting efforts “to combat the hunger, disease, and corruption” in Africa and Haiti. He alluded to a series of energy, trade, environmental, and educational-exchange agreements reached during his meetings with Rousseff the day before.

The president’s Rio stop has seen schedule and site changes. Originally slated to take place in the plaza of Cinelandia, Obama’s remarks were instead delivered nearby inside the Municipal Theater. His visit included a stop in the “City of God” favela and a trip to the statue of Christ the Redeemer with the First Lady and their daughters. The First Family heads on to Santiago the morning of March 21 for the third stop in a five-day tour that’s taking them to Brazil, Chile, and El Salvador. (continue reading… )