India must Engage More with the Continent – Latin America

by August 24, 2018 0 comments

India must Engage More with the Continent Latin AmericaIndia relation with Latin America are in a state of unconcern. As both civilizations have huge scope and so many things in common, India must join hands and made efforts with the continent by playing up its advantages.

India has made serious efforts to improve its economic and political relationships with various parts of the world, but one region which has not figured adequately in its priorities for developing commercial and economic linkages with is the large expanse of Latin America. It was about three years ago that this issue was discussed by some scholars and analysts and reasons put forward for India to develop closer relationships with Latin America. Unfortunately, however, perhaps because of several recent problems in the Latin American and Caribbean region itself, not much has really happened in terms of advancing India’s relationship with that region and for India to work closely with it for mutual economic gain. It is important to look at the prospects for Latin America and the Caribbean region and assess the World Bank’s recent projections on economic output for that combined region.

Latin America and the Caribbean (LAC) region recorded an estimated 0.9 per cent growth in 2017, according to the World Bank, following two years of contraction. Brazil was able to establish stronger than expected growth during the year, but this was of course negated by very serious recession in Venezuela and sluggish growth in some other countries. It appears that private consumption has been the main contributor to economic activity in the region, and with shrinking investments, prospects for growth did not appear very attractive and promising in the previous two years. It is now estimated that Brazil has grown by one per cent during the last year after its deep two-year long recession. This growth again took place essentially due to recovery in private consumption and greater consumer confidence. It appears that retail trade and industrial production growth in Brazil had also picked up, even though there was a contraction in construction.  However, the positive elements in the Brazilian situation are that consumer confidence has remained stable and the labour market has certainly improved. At the same time, Argentina has recovered from recession and expanded at a much healthier rate of 2.7 per cent, essentially driven by increased investment and rising private consumption.

An article some years ago published in the Forbes magazine highlighted the fact that there are historical reasons why India and Latin America should logically come closer together. Firstly, both regions were colonies of European powers that later had to deal with a set of very serious developmental challenges, which also involved the creation of new institutions after independence. Also, it is interesting to observe that in the post-World War era, both India and Latin America adopted policies that were essentially socialist in character. Of course, subsequent developments and realistic compulsions have required both India and the Latin American region to liberalise their policies, but this is not necessarily a permanent condition because it is entirely possible that there could be a reversal in some of these policies, particularly in the case of Mexico, a country with which India must build much stronger ties.

It would be useful to look at the political situation in Mexico, given the fact that the country has elected a new President by a massive landslide, an experienced leader by the name of AM Lopez Obrador, popularly referred to as AMLO, which is the acronym of his name.  AMLO has been very radical in his views and is known to be a staunchly committed socialist, and this would create intriguing prospects for Mexico’s dealings with the US. However, in recent weeks, it appears that AMLO has been modifying his position possibly on account of advice received from some of his own supporters but more importantly because of the concern that Mexican business and industry appear to have expressed on the threat that they see to economic stability in Mexico, given the fact that AMLO has been voicing a number of beliefs and convictions that make business and industry quite nervous.

Lopez Obrador is an enigmatic politician and has been elected by a protest vote.  Essentially, Lopez Obrador, who has run for the presidency twice on earlier occasions, has convinced the people of his country that he would be able to bring about change for the better from Mexico’s large-scale killing and the vicious power of the drug lords. People have also placed faith in AMLO’s ability to curb the rampant corruption in Government and on the part of politicians, which the public is totally disgusted with and deeply resentful of.

Mexico, however, is a country with huge assets in the form of enormous talent and skills, a very positive entrepreneurial spirit among its people and culture and tradition which are totally akin to what India possesses. The two societies have much in common, and under stable and strong leadership Mexico is poised to become a major economic power in South America. At any rate, the LAC region has a combined GDP of over five trillion dollar, a population of over 600 million, of which almost half is below the age of 30 years. Mexico City and its surrounding metropolitan area, for instance, have an average age of only 31 years. The region is rich in mineral resources. Bolivia, for instance, is often described as the Saudi Arabia of lithium, a mineral which is essential for production of lithium-ion rechargeable batteries. India does not even have an embassy in Bolivia.

India would miss enormous economic opportunities in Latin America and the Caribbean region if we continue with the current state of apathy towards that region. It was almost a quarter century ago that Chhedi Jagan, who fought for Guyana’s independence from Britain and led its first Government, visited India. On that visit and discussions at The Energy and Resources Institute (TERI), of which this writer was the founding CEO for thirty four years, Jagan asked for help with his country’s energy problems. I visited that country promptly thereafter, and while helping Guyana with its plans for bagasse-based cogeneration, studied the exciting offshore geology of that nation. On return to India, I urged our Government and the Chairman of ONGC to take up exploration for hydrocarbons off-shore in Guyana, a country wherein the largest group of people is of Indian origin. This advice was not heeded, and ExxonMobil has recently found huge reserves of hydrocarbons in the off-shore areas of Guyana. India must start thinking globally if it wants to become relevant globally.

(The writer is former chairman, Intergovernmental Panel on Climate Change, 2002-15)

Writer: R K Pachauri

Courtesy: The Pioneer

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