The Geopolitical Outlook and Latin America 2025

The FLAR Conference 2024 Presentation

Cartegna, Colombia

It was a great pleasure to be asked to present at the FLAR Conference in Cartagena, Colombia recently. My presentation topic was broader geopolitical and geoeconomic trends that are likely to impact Latin America and which Latin American central banks need to consider in 2025. You can watch my presentation here (it begins at the 56-minute mark).

I recommend you continue to watch the panel presentation that followed for some great insights from the superb group I was honored to join to discuss and debate with on these timely topics.

Opening of the DWS Rep Office in Colombia

A Superb Trip to Bogotá Meeting with Colombia’s Financial Leaders As Colombia Increasingly Becomes a Central Focus of Global Investors

From left to right: DWS’ Aiviel Sanchez,  Ana María Rodríguez, Stella Gonzales Vigil, Mary Wallace, and myself at the DWS Rep Office Reception held at the J.W. Marriott in Bogáta on November 19, 2024.

It was my great pleasure and honor to visit Colombia last week for meetings in Bogáta and Cartenga, all arranged by DWS. Having the opportunity to meet with the leadership of the nation’s pensions funds, bank insurance fund, and other financial leaders was both timely and fascinating. Colombia is emerging as a major hub for technology in the region. Foreign investors are increasingly looking to Colombia as a superb choice to invest for the long term.

While there, I was honored to speak at the DWS Rep Office opening reception. DWS is expanding its operations throughout the region and in particular in Colombia. Colombian investors are deeply focused on the geopolitical developments - particularly between the US and China as well as the upcoming review of the USMCA. There was a lot to discuss with the attendees - and I suspect there will be even more to cover in the months to come.

Trip Notes: Mexico City

I was just in Mexico City for client meetings. The City - and the largest Mexican institutional investors there — are vibrant and confident as Mexico is seeing a boom in manufacturing and has become the US’s largest trading partner - dislodging China for the role.

I was particularly struck by how politically focused local investors are in the upcoming Mexican elections. While most believe Claudia Sheinbaum is on track to a fairly easy election replacing her mentor, Andrés Manuel López Obrador (AMLO), there is a sense that the campaign by her opponent, Xóchitl Gálvez, is pushing Sheinbaum to be more responsive to international investors concerns over AMLO’s erratic economic policies.

Additionally, I found tremendous concern and confusion over the US presidential election outlook. In my numerous client meetings, there were constant questions of “How could America want to return to a face-off between an aged and tired Biden and Trump with all his legal problems and behavior issues?” There are no good answers to those questions.

There was a lot of focus on the USMCA and its likelihood to be reviewed in 2026 and what would a re-elected Trump possibly do to the deal. My view is this is Trump’s “ Baby” and, to put it simple terms, no one is going to say his baby is ugly and needs to be fixed in any serious way. There will likely be tweaks of some sort but not an outright reversal away from the agreement.

As for a re-elected Biden, clearly, there will be a strong effort to address labor concerns that have emerged since the deal was inked. Notably, the Biden Administration has aggressively gone to bat for organized labor in pushing Mexico on greater labor representation - to the point of being accused of simply doing Big Labor’s bidding.

Finally, we would note both President Biden and former President Trump visited the U.S -Mexican border while we were in Mexico City. Our assessment of the collective view of Mexicans we met with is bewilderment at the U.S. border policy - and more than a hint of anger as the Biden Open Border Policy has created a crisis within Mexico as it has become a highway for migrants coming from the Northern Triangle, Venezuela, and everywhere else in the world. This was born out visibly by the large number of homeless we saw in the City, many of them Haitian and other nationalities.

Read Around the World in a Weekend April

April 29, 2022

RUSSIA

• Microsoft Blog “The hybrid war in Ukraine”

  Microsoft released a report detailing the relentless and destructive Russian cyberattacks they have observed in a hybrid war against Ukraine, and what we’ve done to help protect Ukrainian people and organizations. Starting just before the invasion, we have seen at least six separate Russia-aligned nation-state actors launch more than 237 operations against Ukraine – including destructive attacks that are ongoing and threaten civilian welfare. The destructive attacks have also been accompanied by broad espionage and intelligence activities. 

• Rand Corporation “Russia’s Tragic Failure to Reform Its Economy”

  Russia's invasion of Ukraine and resulting sanctions will likely devastate Russia's economy. If the country had taken a more productive economic course over the past two decades, it might be looking toward a different future—one in which economic reforms had more tightly integrated Russia with the economically advanced countries, enhanced Russian influence and power, and built global trust. Instead, Russia has cast the West as its enemy, and its influence, power, trust, and reputation are shattered.

• Foreign Affairs “What Does the West Want in Ukraine?”

  Council on Foreign Relations President Richard Haass asks the question of how success in Ukraine will be defined and argues it needs to be done now – before it is too late.

China

• Carnegie Endowment for International Peace “US-China Technological ‘Decoupling’: A Strategy and Policy Framework”

  Washington has awakened to find the United States deeply technologically enmeshed with its chief long-term rival. America built those technology ties over many years and for lots of good reasons. China’s tech sector continues to benefit American businesses, universities, and citizens in myriad ways—providing critical skilled labor and revenue to sustain U.S. R&D, for example. But that same Chinese tech sector also powers Beijing’s military build-up, unfair trade practices, and repressive social control. What should we do about this? 

• Rhodium Group “Chinese FDI in Europe: 2021 Update”

  Chinese outbound investment to the rest of the world stalled in 2021. While overall global FDI rebounded strongly, Chinese outbound FDI edged up by just 3 percent to USD 114 billion (EUR 96 billion). Meanwhile, China’s global outbound M&A activity slipped in 2021 to a 14-year low, with completed M&A transactions totaling just EUR 20 billion, down 22 percent from an already weak 2020.

India

• Carnegie Endowment for International Peace “What is in Our Interest”: India and the Ukraine War”

  As Russia’s war in Ukraine unfolds, India’s national interests have so far dictated a position of formal neutrality. Here are the factors New Delhi faces in balancing its foreign policy priorities.

• Brookings Institution Podcast “Why globalization is shifting in favor of India, not China”

  Arvind Subramanian, senior fellow at Brown University’s Watson Institute and Center for Contemporary South Asia, and former chief economic advisor to the Government of India, talks with host David Dollar about a range of trade and foreign relations issues India faces. In particular, he explains why globalization is shifting in India’s favor rather than China’s, how India views trade relations with China, Russia, and the West, and prospects for continued good relations with the United States, especially as India takes a more neutral stance on Russia’s war against Ukraine.

Pakistan

• The Diplomat Podcast  “What’s Driving Pakistan’s Political Crisis?”

  Pakistan’s political arena is in turmoil. Prime Minister Imran Khan, facing a no-confidence vote, made a last-ditch attempt to avoid his fate by dissolving Parliament altogether, alleging a foreign plot headed by the U.S. to oust him. The Supreme Court intervened, allowing the vote to proceed, but Khan and his PTI are refusing to recognize the new government. Most PTI lawmakers resigned, leaving Pakistan’s National Assembly with 100 open seats. Meanwhile, the Pakistani military, the “hidden hand” behind national politics, has attempted to remain neutral – but its lack of support helped crown Khan’s replacement.

Lebanon

• Carnegie Middle East Center “Resurrecting Arafat in Beirut?”

  Hamas, with Hezbollah’s help, is building up a military presence in Lebanon, whose ultimate consequences could be devastating.

Iran

•  Carnegie Sada “The Geopolitics of the Iran-Qatar Electricity Grid Connection”

  Last February, during Iranian President Ibrahim Raisi’s visit to Qatar, the two countries agreed to connect electricity grids. Currently, Iran’s electricity network is connected to Iraq, Azerbaijan, Armenia, Turkmenistan, Afghanistan, and Pakistan. For Iran, this is a step towards strengthening energy diplomacy, but without a change in Iran’s foreign policy — that is, without the removal of sanctions and attracting foreign investment — it cannot use its full potential in the energy sector and, ultimately, will not be able to increase its influence on the international stage.  

Africa

• Council on Foreign. Relations “How Russia’s Invasion of Ukraine Will Impact Africa’s Energy Transition”

  The Russian invasion of Ukraine will shift the geopolitics of decarbonization, with particularly stark implications for energy politics in Africa.

• Foreign Affairs “Rebels Without a Cause: The New Face of African Warfare”

  In the past, most armed groups on the continent were focused on seeking to topple governments or secede and found new countries.  But the new face of many African conflicts today is one where those taking up arms are more likely to do so as a means of bargaining over resources.

Latin America/Caribbean

• IMF Blog “Latin America Faces Unusually High Risks”

  The War in Ukraine, higher inflation, tighter financial conditions, economic decelerations of key trading partners, and social discontent may dim growth prospects.

• Center for Strategic and International Studies “The Caribbean in the Crossfire”

  Between Covid-19, Narcotics, China, and Russia’s Invasion of Ukraine, the Caribbean is facing unprecedented challenges – all of which should be of maximum concern to the United States.

• Americas Quarterly “Latin America Doesn’t Want a New Cold War”

  Regional governments should take steps to ensure they are “not once again a battleground for larger powers,” an Argentine scholar writes.