Latin American-Gulf Economic Ties Are Still Largely AspirationalApr 4 2017
On a recent visit to Buenos Aires, Sheikh Abdullah bin Zayed Al Nahyan, foreign affairs minister for the United Arab Emirates, signed several agreements with his Argentinian counterpart, Susana Mabel Malcorra, while talking enthusiastically about the potential for the two countries “to enhance cooperation, explore opportunities and overcome challenges” as they continue to develop their relationship. Yet attempts to deepen ties between Latin American and Gulf countries have long run into geographic, political and cultural obstacles. In an email interview, Michael Shifter, president of the Inter-American Dialogue, discusses the slow process of trying to bring the two regions closer together.
WPR: Historically, what economic links have existed between Gulf and South American countries, and how have these relationships evolved in recent years?
Michael Shifter: Economic links between Gulf and South American countries have historically been extremely limited. The 1970s witnessed a modest change. An oil boom resulted in indirect exposure of Gulf state investors to Latin American markets through their participation in Western development banks. The second oil boom in the mid-2000s spurred increased investment in the region as the financial crisis led to efforts toward greater diversification in emerging markets.
Although the amount of exports and imports between Latin America and the Gulf states remains relatively small—constituting between 1 and 2 percent of total trade for both regions—the relationship between the two regions has grown significantly over the past decade. The increase is largely due to efforts championed by Latin American leaders such as former Brazilian President Luiz Inacio Lula da Silva, who in 2005 conceived the first Summit of Heads of State and Government of South American and Arab Countries. Brazil has been a key driver in forging the relationship.
At the time of the most recent summit in 2015 in Saudi Arabia, annual commerce between the two regions accounted for nearly $35 billion—a tiny, albeit growing, fraction of overall trade. The next summit is scheduled to take place in 2018 in Venezuela.
Although OPEC remains the most important organization in Latin American and Arab ties, the last decade has brought about other milestones in cooperation between the regions. In 2012, foreign ministers from the Gulf Cooperation Council—made up of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE—met with their counterparts from the Community of Latin American and Caribbean States in the first meeting of its kind to discuss trade and investment.
The recent agreement between Argentina and the UAE marks yet another step in what has been a slow and gradual process toward increased overall trade between the two regions.
WPR: What market opportunities do countries like the UAE and other Gulf countries offer to Argentina and its neighbors, and what do South American countries seek from the relationship?
Shifter: While Arab-Latin American ties are unlikely to be a major contributor to new growth in either region, there are still some opportunities for meaningful links….
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