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  HOME | Opinion (Click here for more)

Beatrice Rangel: From the Brady Bond to the Biden Formula – Something is about to Happen in the Americas!!!
Former Venezuela Presidential Chief of Staff Beatrice Rangel – just back from meeting with U.S. Vice President Joe Biden at the CAF conference in Washington – reports on what the latest U.S. plans are for Latin America.

By Beatrice E. Rangel

In the aftermath of the 1980s Latin American debt crisis, President George Herbert Walker Bush -- whose geopolitical talents are uncontested -- launched the Brady Plan to trigger economic revival in the Americas.

To Bush the Elder's mind, globalization had tied the economies South and North of the Rio Grande together in an indissoluble wealth creation network.

As a supreme network operator, he knew that black holes can destroy networks as they block the free flow of ideas, goods and services. Blockades tend to grow and eventually the whole network comes to a halt.

This was the situation of the Western Hemisphere Economy in the 1980s. Latin American economies confronted by high interest rates and low commodities prices, admitted their inability to service hundreds of billions of dollars of their commercial bank loans. Given that most economies were dependent on commercial bank financing, the perception of absence of creditworthiness led to economic stagnation and a severe interruption of credit and capital flows to these nations and their private sectors.

The mirror image of this cataclysmic event in the U.S. was a recession that began in 1982, fought by Reagan. Business bankruptcies rose 50% over 1979. Exports took a dip. Farmers were particularly badly hit as exports declined, crop prices fell, and interest rates rose.

In the wake of that experience, for President Bush the need to act was clear. And he devised a debt solution that not only pushed the hemisphere out of recession but set the basis for a a long standing period of growth for the U.S., Latin American and the world economy.

At the center stage of the Bush Administration's Initiative for the Americas were the Brady Bonds.

The basic tenets of the Brady Plan were relatively simple and were taken from common practices in domestic U.S. corporate work-out transactions. They entailed the granting of debt relief by bank creditors.

This relief would be tied to a greater assurance of collectability in the form of principal and interest collateral. In addition to Treasury bonds and -- in the case of Venezuela -- oil warrants, state owned enterprises also became supporting collateral in the sense that debt relief needed to be linked to some assurance of economic reform.

Improved collateral and economic reforms enhanced the attraction of the bonds issued by debt ridden nations. This resulted in greater tradability which allowed creditors to diversify risk more widely throughout the financial and investment community. The Hemispheric economy was successfully jumpstarted!!!!
It was not all smooth sailing after and along the way there was the Tequila crisis, the Asian flu, the Internet bubble, the Commodities Boom, and most recently, the mortgage crisis that triggered a worldwide recession.

Meanwhile the political situation in the Americas deteriorated, as U.S. attention was absorbed by game changing events staged by foreign powers or resulting from myopic foreign policies.

First was the demise of the Soviet Union and the German reunification.

Then came the ascent of China as an economic power.

Then the Arab World implosion triggered by the invasion to Iraq and the rise of Al Qaeda.

And just as the U.S. seems to be ready to turn its attention to the home field, it is beginning to worry about the neighborhood.

Just as in the eighties, U.S. economic recovery depended on pulling Latin America out of the lost decade, now pulling America out of despair through meaningful jobs and greater export activity depends on jump starting not just growth but development in Latin America.

And that seems to be what is being concocted in Washington by the Obama Administration in synchronization with the Clinton camp. There is a plan for the region and, just like the Brady Plan, it has three components.

These were clearly enunciated by Vice President Biden on September the 8th at the inaugural session of the XX CAF-Interamerican Dialogue Conference. According to the VP of the US relations with Latin America will be guided by three tenets.

First, comes an alliance to fight corruption. Or as Biden himself defined this first tenet:

"First, no democracy can be sustained without economic growth. And economic growth cannot flourish in the absence of the rule of law. It's sort of the new physics of economic relationships. Businesses do not invest in nations where the rules are not transparent and predictable, where the court system is not fair, where intellectual property is not protected. So it's absolutely critical to root out the significant remaining vestiges of corruption that remain wherever governments have been too long run by bribery and influence peddling."
"Corruption is a cancer that eats at the body politic, rips the fabric of any society where it is proliferated, promoting inequity and siphoning away billions of government dollars that could otherwise help feed children, build schools, improve infrastructure, significantly increase their security capability. "


Second, comes Energy cooperation which is the essential ingredient to a hemispheric economic redeployment.

In Biden's words:

"The second key ingredient for economic growth depends on securing access to energy that is affordable and reliable. If you can't turn on the lights, you can't make a living. If you can't turn on the lights, businesses are not going to promote themselves in your region. Students don't achieve their full potential when they can't study after dark or connect to the Internet. Economies don't grow when you can't turn on the lights. That's why the energy security in the region has been a priority for our administration from the beginning. And now is the moment to lock in sustainable energy security that will enable -- and endure -- the whole region when volatile oil prices inevitably rise again."

And the third pillar is to reconquer central America from the pawns of poverty crime and destitution.

"For too long, Central America has been left out of the story of Latin America's rise. Central America is the hub uniting our region -- north and south. But it is also the nexus of many of our biggest and most consequential regional challenges -- energy insecurity, corruption, crushing poverty, endemic violence, education systems that are lacking, and transnational crime."

These ideas are as revolutionary as those that made the Initiative of the Americas. They hit the nails in the head in so far as setting the foundations for further integration and the elimination of the so called development cost that is the way scholars treat bribery.

The plan would thus effectively blast the institutional framework created by Spain's Phillip II which has thrived on corporativism and mercantilism for over 500 years and that is responsible for Latin America's underdevelopment.

Unfortunately for the Americas they come at the end of a U.S. administration, not at the beginning when all resources are fresh and ready for deployment and Congress respects the civic honeymoon of the people and a newly elected Chief executive.

It also comes at a point when should the electoral campaign end with Mr Trump's triumph, this new Initiative for the Americas will end up as just another beautiful dream.


Beatrice Rangel is President & CEO of the AMLA Consulting Group, which provides growth and partnership opportunities in US and Hispanic markets. AMLA identifies the best potential partner for businesses which are eager to exploit the growing buying power of the US Hispanic market and for US Corporations seeking to find investment partners in Latin America. Previously, she was Chief of Staff for Venezuela President Carlos Andres Perez as well as Chief Strategist for the Cisneros Group of Companies.

For her work throughout Latin America, Rangel has been honored with the Order of Merit of May from Argentina, the Condor of the Andes Order from Bolivia, the Bernardo O'Higgins Order by Chile, the Order of Boyaca from Colombia, and the National Order of Jose Matías Delgado from El Salvador.

You can follow her on twitter @BEPA2009 or contact her directly at BRangel@amlaconsulting.com.



Also by Beatrice Rangel in her Latin America from 35,000 Feet series

Beatrice Rangel: Rio -- Demystifying the Olympic Games

Beatrice Rangel: The Luddite Syndrome in the Americas

Beatrice Rangel: Venezuela's Unexpected Transition

Beatrice Rangel: We Now Have a Wider Canal But Has Our Wisdom Expanded???

Beatrice Rangel: From Brexit to Tesla, Progress is Made by Leaders!!!

Beatrice Rangel: As the World Goes Latin, Latin America Gets Logical

Beatrice Rangel: On the Difficulties of Fighting Barbarism in Latin America

Beatrice Rangel: The Impending Age of Housekeeping!!!!

Beatrice Rangel: What Happened to All Those Rosy Forecasts for Latin America?

Beatrice Rangel: On Dialogue and the Rules of Geopolitics in Latin America

Beatrice Rangel: The Ides of Wisdom in Venezuela

Beatrice Rangel: On the Discreet Charm of Populism

Beatrice Rangel: Three Ladies in Distress

Beatrice Rangel: Trump, Lula, Kirchner and the Last Tupi-Guaranis

Beatrice Rangel: Time for Departures in the Americas

Beatrice Rangel: A Contrarian View on the Panama Papers

Beatrice Rangel: Brazil's Lady in Her Labyrinth

Beatrice Rangel: Back to a Divided Home!!!

Beatrice Rangel: A Historical Take-Off in the Americas??

Beatrice Rangel: A Skipped Journey, a Reaffirmation and a Clearing of Path in the Americas

Beatrice Rangel: The Demise of Civility in the Americas!!

Beatrice Rangel: The Americas from Boutros Boutros-Ghali to Ban Ki Moon

Beatrice Rangel: The Pope's Difficult Stopover in the Americas

Beatrice Rangel: Farewell to The “Diplomacy of Reason”

Beatrice Rangel: 2 Diseases in Latin America -- Different Prescriptions, Very Different Outcomes

Beatrice Rangel: On Health Alerts and the Long Arm of Justice in the Americas

Beatrice Rangel: When Crime Meets Glory

Beatrice Rangel: Playing Hansel and Gretel in the Americas

Beatrice Rangel: Good News/Bad News Starts The Monkey Leap Year

Beatrice Rangel: The Gifts of Christmas!!!!!!

Beatrice Rangel: Crying Wolf in Venezuela

Beatrice Rangel: A 21st Century Tale of Two Cities

Beatrice Rangel: Are the Americas Ready for President Trump?

Beatrice Rangel: On Predictions of War & Global Confusion

Beatrice Rangel: Paris and the Return of Fear

Beatrice Rangel: Marijuana & Latin America's Next Trade Corridor

Beatrice Rangel: Of Burning Airplanes & Argentinean Tsunamis

Beatrice Rangel: The Good, the Bad, and the Ugly in the Americas!!

Beatrice Rangel: Buena Vista's Magic Covers the Americas

Beatrice Rangel: Pride and Perjury in the Americas

Beatrice Rangel: Trompe L’oeils Proliferate in the Americas

Beatrice Rangel: The Economic Consequences of Peace in Latin America

Beatrice Rangel: Colombia, the FARC & the Makings of Gangland in Latin America

Beatrice Rangel: When Extreme Weather Meets Extreme Politics Calamities are Bound to Happen

Beatrice Rangel: When Ladies Hit 70

Beatrice Rangel: About Uninformed Elites and Gullible Leaders

Beatrice Rangel: On US-Engineered Soft Landings in Cuba and Venezuela

Beatrice Rangel: On the Many Ways Cecil Matters

Beatrice Rangel: Blue Moons Lead to Extraordinary Happenings in the Americas

Beatrice Rangel: On Why Embassy Openings Do Not Necessarily Herald Different Policies

Beatrice Rangel: When Jupiter meets Venus

Beatrice Rangel: When Markets and Manners Crash

Beatrice Rangel: From Grexit to Exit, Contagion is in the Air

Beatrice Rangel: An Infuriated God & An Environmental Crusader Mark the Summer Solstice

Beatrice Rangel: Between Ionesco & the Falklands Syndrome

Beatrice Rangel: The Ugly Americas

Beatrice Rangel: How FIFA Corrupted the Beautiful Game in the Americas and World

Beatrice Rangel: Could the US RICO Act Be Applied to Latin America?

Beatrice Rangel: On the Discreet Charm of Commodities for Latin America

Beatrice Rangel: The End of the Chinese Free Lunch in the Americas!!

Beatrice Rangel: The Crooked Twig of Democracy in the Americas

Beatrice Rangel: Of a White Knight for Three Latin American Ladies in Distress

Beatrice Rangel: Withdrawal Symptoms?

Beatrice Rangel: The Un-Mannered Summit

Beatrice Rangel: Easter Miracles in Latin America and the World

Beatrice Rangel: Two Islands, Two Legacies & One Challenge - Modernity

Beatrice Rangel: Killing Me Softly -- the Obama Administration’s Legacy in Latin America

Beatrice Rangel: Of Upcoming Dynasties and Exhausted Ideas in Latin America

Beatrice Rangel: Of Thunderous Silences, Quiet Noises and Flash Backs in Latin America

Beatrice Rangel: Latin America's Dangerous Exports to Europe & the Demise of an Old Fox

Beatrice Rangel: Of Sweet Deals, Sugar Daddies, Direct Mail & Obama’s Care

Beatrice Rangel: Of Latin American Singing Birds, Femme Fatales & Empty Shelves

Beatrice Rangel: When Flying Dragons & Rage Infusions Turn Against Their Latin American Masters

Beatrice Rangel: Holy Haberdashery!!! Is Fire Building Under the Surface in the Americas??

Beatrice Rangel: 2015 -- A Year for Balance in the Americas???

Beatrice Rangel: Pope Francis Looks at the Americas In His Christmas Remarks

Beatrice Rangel: The Paint Brush Hanging from the Wall in Latin America

Beatrice Rangel: A Future for the Americas??

Beatrice Rangel: Going Forward, Going Backward -- It's the Americas!!

Beatrice Rangel: An Eerily Familiar Week in the Americas

Beatrice Rangel: Tale of Two Walls

Beatrice Rangel: Across the Americas, We the PEOPLE

Beatrice Rangel: Across Latin America, The Populist Beat Goes On!!

Beatrice Rangel: Oh My, The Patron of the Eternal Feminine Has Left Us!!!

Beatrice Rangel: Communism from China to Cuba Finds Corruption!!!

Beatrice Rangel: From Rio to Hong Kong Discontent Taps the East to Find a New Way

Beatrice Rangel: Will Latin America Miss the Broadband Development Target?

Beatrice Rangel: Kissinger’s World Order and Latin America

Beatrice Rangel: The Third Attempt -- Will Modernity Prevail in Latin America?

Rangel: While US is Away, Latin America Rethinks Development Paths

Rangel: In the Midst of Riots, a Star is Born in Brazil

Rangel: In Mexico Cinderella Gets to the Ball while Colombia Gets a Chance at Peace



 

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