LATIN AMERICA: 'Crisis as Opportunity' – WEF Meeting

• by Fabiana Frayssinet (rio de janeiro)
• Wednesday, April 15, 2009
• Inter Press Service

Brazilian President Luiz Inácio Lula da Silva, hosting the Latin America edition of the World Economic Forum (WEF) in Rio de Janeiro, said 'No solution is possible without the effective participation of developing countries. We didn’t create the problem, but we are a fundamental part of the solution.'

What is needed, according to Lula, is the creation of a new global order, which he had called for during his years as a trade union leader, and which is now also seen as necessary even by presidents of several rich countries.

For the Brazilian leader, the region can help provide answers by proposing a new 'democratic' financial system that would establish controls not only on developing countries, but also industrialised ones.

The new system would not be based on the 'easy profits' of the past, a 'virtual economy' that replaced production with 'the trading of paper, paper and more paper,' said Lula, referring to financial speculation.

He wondered how it could be possible for 'a part of the world that was so know-it-all, that gave out so much advice on the economy to emerging countries,' to fail to realise what was happening.

Lula, a moderate leftist, criticised that 'all of those people who for years were earning trillions of dollars, who appeared on the Forbes list of the world’s richest people,' didn’t notice that the GDP of poor countries was not growing like their fortunes, and that people’s lives were not improving.

His speech was listened to closely by Colombian President Álvaro Uribe, the only other Latin American president who took part in the opening of the WEF meeting Wednesday.

In his address, the rightwing leader sought to mark his ideological differences, referring to what he called a 'participative, but not all-powerful, state.'

Reports circulating at the meeting, which ends Thursday, say the biggest challenge for Latin America is to achieve economic growth without accentuating social inequalities.

Foreign direct investment (FDI) in the region will plunge to 43 billion dollars this year, compared to a record 126 billion in 2007, according to the Economic Commission for Latin America and the Caribbean (ECLAC).

WEF director for Latin America Emilio Lozoya said that in this region, the crisis is not a financial one, but a consequence of the fall in external demand for its products.

Latin America’s exports to other markets will shrink by at least nine percent in 2009, say the documents circulating at the WEF meeting.

Agreeing with other participants that the region is in a solid financial position to face the global recession, Lozoya said it was necessary to counteract the fall in exports to rich countries with incentives aimed at bolstering domestic demand, such as an expansion in the availability of credit.

'A time of crisis presents a great opportunity to make wise investments,' he told IPS.

'Latin America has had a decent rate of growth in the last five years, five percent, but it was not growing like the rates seen in more dynamic markets like China and India, because the big bottlenecks were infrastructure and education,' he said.

Marcelo Odebrecht, chief executive of Brazil’s Odebrecht construction firm, concurred with the need to invest in infrastructure works to strengthen the domestic market.

Representatives of some of the region’s largest companies are now going even further in their new understanding that a more active role for the state is needed.

Odebrecht, whose business invests in several countries besides Brazil, cited the need to stimulate public works with a social focus, like affordable housing programmes.

'It is not up to us, Latin America, to fix what the developed countries have done, but we have to combat the effects,' the executive commented to IPS.

That is 'homework' for governments and businesses in the region, which are ready to do what they can, he said.

The 'crisis as opportunity' mentality also prevailed among other participants.

In the view of leaders like Lula, the opportunity that is opening up is the possibility to press for reforms and controls in multilateral lending institutions.

Meanwhile, spokespersons for Brazil’s financial system, like Ricardo Villela Marinho, say the crisis will play a crucial role in getting the region 'to come together,' 'cooperate' and 'increase intra-regional trade.'

Marinho is CEO of the powerful Brazilian Itaú-Unibanco bank, which has ambitions to expand around the world.

'Some believe the world is falling apart, but actually it is coming together to find solutions to the present challenges,' Marinho said at a news briefing where he underscored attitudes like that of the Brazilian government, which decided to contribute funds to the International Monetary Fund (IMF).

The participants in the two-day WEF meeting are also discussing issues like sustainable development policies, regional integration and the fight against drug trafficking, ahead of the Fifth Summit of the Americas, to take place Apr. 17-19 in Trinidad and Tobago.

© Inter Press Service (2009) — All Rights ReservedOriginal source: Inter Press Service

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