Building on Strengths, Collaborating on Challenges

Regional integration, social inclusion, and the need for a more competitive business climate in Latin America emerged as recurring themes at the XVIII Annual CAF Conference. Some 1,200 past and present government officials, lawmakers, diplomats, academics, economists, journalists, policymakers, and other participants gathered in Washington, DC, on September 3 and 4 to discuss the most pressing challenges and opportunities in the Western Hemisphere. Another 1,800 tuned in from around the world and participated in the conversation via social media.

Speakers and panelists at the event, organized by CAF – Development Bank of Latin America, the Inter-American Dialogue, and the Organization of American States (OAS), addressed an ambitious range of issues, from elections and energy to economic growth and education. In his welcoming remarks, Inter-American Dialogue president Michael Shifter noted that the annual conference has generated growing levels of interest “and has helped us to understand that the region can only be interpreted within a global context.”

He described the conference as an opportunity for in-depth discussion on the direction the region is heading.

The gathering opened with a keynote address by former president of Mexico Felipe Calderón, who offered a retrospective on “the Decade of Latin America,” providing analysis on the dramatic growth experienced by the region and offering suggestions for further expansion. He insisted that sustainable development be part of future growth, called for the cultivation of markets that depend less on commodities, and stressed the need for value-added goods and services.

Calderón also detailed measures taken by his administration to strengthen Mexico, including free trade pacts, reduced import tariffs, infrastructure investment, and assistance for small and medium-sized businesses.

Economic Outlook: Is the Party Over?

Demand for primary commodities and sound fiscal policy allowed much of Latin America to skirt the economic recession that recently slammed the United States and Europe. However, economies of the region are now slowing. To accelerate growth, they must invest in productivity, infrastructure, and industrialization, according to participants on a panel discussing the region’s economic outlook. The recurring themes of integration and competitiveness were also examined by the panel, which was moderated by CAF president Enrique García.

Alejandro Werner, director of the Western Hemisphere Department at the International Monetary Fund (IMF), said the region will end 2014 with its lowest growth in 13 years. He said greater efficiency is needed in government programs designed to reduce poverty. Uruguay’s minister of economy and finance, Mario Bergara, meanwhile, advocated for investment in innovation, technology, and social equity.

Luis Alberto Moreno, president of the Inter-American Development Bank (IDB), asserted that the region must increase productivity and adopt educational goals that address “the gap between skills and the labor market.” He called for significant investment in infrastructure and a jump in global competitiveness. At the same time, however, Moreno offered a warning: Economic growth must balance social needs and expectations, especially since today “about 50 percent of the Latin American population belongs to the middle class,” a group that is demanding more from its governments and holding officials more accountable than ever.

João Carlos Ferraz, managing director of BNDES, the Brazilian state development bank, discussed the need to expand opportunities for the emerging middle class and to create economically relevant markets. He agreed that infrastructure investment was crucial but said it must be long-term, coordinated, and benefit the overall population.

The World Bank’s vice president for Latin America and the Caribbean, Jorge Familiar, noted that for the first time in the history of the region, there are more middle class Latin Americans than those living in poverty. However, he said many people could easily return to poverty if structural reforms are not adopted to reduce inequality. Colombia’s former minister of finance, José Antonio Ocampo, pointed to domestic markets as an important vehicle for economic growth.

20 Years after the First Summit

During a panel focused on the 20th anniversary of the first Summit of the Americas, OAS Secretary General José Miguel Insulza asserted that democracy is “healthier than ever,” pointing to the 2001 adoption of the Inter-American Democratic Charter as a tool for strengthening democratic goals. He also noted that—for the first time—34 countries in the region have democratic governments. Insulza acknowledged, however, that the strength of democracies across the region is uneven and institutions still need support.

Also on the panel were Panama’s former president, Martín Torrijos; Colombia’s permanent representative to the United Nations, María Emma Mejía; Marco Aurelio García, the foreign policy adviser to the president of Brazil; and Thomas McLarty III, former adviser to US president Bill Clinton. Claudia Gurisatti, managing director of Colombia’s NTN 24, served as moderator.

Insulza called for dialogue, rather than interventions in countries’ internal processes, as a way to resolve disputes. García concurred, recalling that in 2008 Bolivia’s internal crisis and a dispute between Colombia and Ecuador were resolved through dialogue.

Insulza also pointed out that the OAS Special General Assembly in Guatemala City scheduled for September 19 is already positioned to collaboratively advance four standpoints that would affect drug policy: drugs are a public health issue, alternative sanctions should be used before incarceration, the fight against organized crime must be reaffirmed, and institutional strengthening must be supported. McLarty, meanwhile, talked about President Barack Obama’s drug policy and the president’s commitment to education.

Among other themes, the panel discussed Cuba’s engagement with the rest of the region. Torrijos expressed his desire to see Cuba take part in the 2015 Summit of the Americas in Panama. Mejía reminded conference participants that Cuba was a divisive issue for the 2012 Summit of the Americas in Cartagena. After several countries said they would not take part if Castro’s government was excluded, Colombian president Juan Manuel Santos intervened and an understanding was reached: Cuba would participate in the next summit.

Insulza, who noted that the host country decides both the agenda and who is invited, voiced support for Cuba’s inclusion. During an earlier presentation at the CAF conference, Jennifer McCoy, director of the Americas Program at The Carter Center, predicted that Cuba would end up taking part in the summit.

McCoy spoke on a panel that addressed Cuba at greater length. The session also featured University of Havana Professor Juan Triana; University of California at San Diego Professor Richard Feinberg; World Bank chief economist for Latin America and the Caribbean, Augusto de la Torre; and Carlos Saladrigas, chairman and CEO of Regis HR Group and chairman of the Cuba Study Group.

The panelists examined Cuba’s continuing economic distress, despite reforms proposed by President Raul Castro. De la Torre said Cuba’s two-layer exchange rate, which he described as a system of “subsidies and transfers,” creates serious problems for the economy. He also noted the necessity of tax reform.

Global Integration

In one of the conference’s keynote addresses, Enrique Iglesias discussed Latin America’s integration into the global landscape. The former secretary general of the Ibero-American General Secretariat (SEGIB) and past president of the Inter-American Development Bank said the world has become a dangerous place, with great instability and conflicts “reminiscent of the Middle Ages.”

At the same time, he said, “we are facing the greatest economic power redistribution in the history of mankind, from West to East and from North to South.” By way of example, he pointed to a possible trade mega-treaty involving the United States, Canada and the European Union and to free-trade discussions among a dozen Pacific Ocean countries.

The Uruguayan economist called for hemispheric integration and a focus on domestic markets. “First, we need to increase Latin America’s industrialization. It will balance our growth, which is going to come from labor, knowledge, and technology.” He added: “Educational reform is the great challenge of Latin America.”

The theme of integration also underpinned the panel titled “Oil, Shale Gas, and Renewables: Shifts in the Global Energy Matrix and Their Impact on Latin America.” Speakers included former US secretary of energy and former governor of New Mexico, Bill Richardson; Adam Sieminski, administrator of the US Energy Information Administration; the president of Brazil’s State Energy Research Agency, Mauricio Tolmasquim; the Asian Development Bank’s former managing director, Rajat M. Nag; the global head of commodities research at Citigroup, Ed Morse; and Francisco Monaldi, founder and director of the Center on Energy and the Environment at IESA in Venezuela.

Eyes on the Future

Inter-American Dialogue president Michael Shifter moderated a panel on elections and political developments that featured analysis from Gustavo Fernández, former foreign minister of Bolivia; Diego Escosteguy, Brasilia bureau director of Época magazine; La Silla Vacía director Juanita León from Colombia; social research firm Equipos Mori director Ignacio Zuasnabar from Uruguay; Datanálisis president Luis Vicente León from Venezuela; and El País columnist and Georgetown University adjunct professor Hector Schamis.

The panelists discussed the region’s electoral landscape, particularly Brazil’s upcoming election that could unseat incumbent President Dilma Rousseff of the Workers Party. Several panelists predicted that Socialist Party candidate Marina Silva was likely to win the election in a runoff round. The recent death of Eduardo Campos, the Socialist Party’s original presidential candidate, pushed Silva into the forefront of the campaign.

Brazil’s election – with two women running for the nation’s top office – set the backdrop for a conference panel focused on the advancement of women in the public and private sectors. The high-energy discussion included a debate over the use of quotas to increase women’s participation in politics, and government policy that could encourage women’s entry into politics and the upper tiers of the corporate world.

The panel included Alejandra Mora Mora, who is minister for the Status of Women of Costa Rica and president of the Inter-American Commission on Women; Keiko Fujimori, the leader of Peru’s Popular Force party; former Colombian Senator Cecilia López; Pro Mujer CEO Rosario Pérez of Mexico; Chiara Paola Capdevila, who sits on the board of the Industrial Union of Paraguay; and Union of Industrialists of Panama president Aida Michelle Ureña de Maduro.

Elsewhere during the conference, a special keynote address by Marie-Carmelle Jean-Marie, Haiti’s minister of the economy and finance, detailed the progress made in rebuilding the Caribbean country following the devastating 2010 earthquake and subsequent cholera epidemic.

The conference also spotlighted innovation and entrepreneurship that carries a social benefit during a panel titled “Social Innovation in the Global South.” Pamela Hartigan, director of the Skoll Centre for Social Entrepreneurship at the University of Oxford, served as moderator. Andrew Kassoy explained how the initiative he founded, B Lab, certifies companies that provide social benefits. Jennifer Riria, the CEO of Kenya Women Holding Company, discussed changes in the microfinance sector. AndJack Sim, founder of the World Toilet Organization, detailed the difficulty he faced in getting his initiative recognized in his home country, Singapore. Chile’s Julián Ugarte discussed Socialab, where he serves as executive director, while Ana Mercedes Botero, CAF’s director of social innovation, explained how entities such as the CAF – Development Bank of Latin America can encourage social entrepreneurship in the Americas and beyond.