What Can the Middle East & Latin America Offer Each Other?

Presidency of Peru / CC BY-NC-SA 2.0

Q: Peruvian President Ollanta Humala recently wrapped up a nine-day visit to the Middle East during which he visited Israel, Palestine and Qatar, where he signed agreements to increase trade and investment cooperation and promoted investment opportunities to business leaders. Also in recent weeks, Israel was granted observer status in the Pacific Alliance and Prime Minister Benjamin Netanyahu announced he will visit the region in April, while Iranian President Hassan Rouhani said the country wants to improve economic ties with Latin American counties. What is behind increasing engagement between the two regions? What do the regions have to offer each other economically? What businesses stand to gain from stronger ties between Latin American and Middle Eastern countries?

A: R. Evan Ellis, assistant professor of national security studies at the William J. Perry Center for Hemispheric Defense Studies in Washington: "As Latin America and the Caribbean continues to diversify its economic relationships globally, its $40.6 billion in trade with the Middle East (as of 2012) is modest in comparison with its $807.4 billion in trade with the United States, $243.5 billion in trade with Europe, or even its $360.4 billion in trade with Asia. This is ironic, given that some of Latin America's most successful businessmen and families come from the Levant, and traders of Lebanese/Syrian origin play a key role in the region's export sector. The present developments are driven by important, yet separate and idiosyncratic factors. Iranian President Rouhani, who has a Ph.D and studied in Scotland, is attempting to leverage his conciliatory gestures on Iran's nuclear program to escape isolation from international commercial and financial markets through a courtship of the region which is lower-key, less overtly political and less ALBA-centric. Israel, in the context of an increasingly unstable regional environment, seeks to shore up overseas friendships while building its position in the global economy by exploiting its comparative advantages in high-value sectors such as information and other technologies, defense systems and the security industry. The February visit by Ollanta Humala to the Middle East arguably sought to build on Lima's hosting of the Arab-Latin American summit in 2012, to showcase Peru's growing status as international player, and was carefully balanced to include Israel and Palestine, plus a conservative Gulf state with an ample sovereign wealth fund."

A: Cecilia Baeza, professor of international relations at the Fundação Getulio Vargas and deputy coordinator of the Arab-Latin American Forum: "The reciprocal interest of Latin America and the Middle East is relatively new. Both regions have multiplied their efforts over the last decade to diversify their trade and investment partners, and it can be argued that they represent the last economic frontier for each other. Although rising, bi-regional trade and investment flows remain relatively low when compared with other South-South economic links. And yet, complementarities do exist, in particular in the areas of food security and agricultural development, energy, hospitality, and infrastructure and logistics. Business opportunities are still largely untapped, sparking a new investor appetite and political interest. In the area of food security for example, several deals involving Gulf interests have been concluded in Latin America over the last few years: In 2011, Al Gharrafa Investment, a subsidiary of Qatar's sovereign wealth fund, increased its stake in Adecoagro, an agricultural company in South America backed by billionaire investor George Soros and with operations in Argentina, Brazil and Uruguay. In 2012, the Saudi company Almarai, the largest dairy company in the Gulf, acquired Fondomonte, an Argentine company, and its 12,306 hectares of land. What is lacking now for greater investment flows is information and infrastructures for connecting the two regions whose geographical distance is a real obstacle to the strengthening of bi-regional relations. These two shortcomings have been identified during the recent inaugural meeting of the Council on Arab Relations with Latin America and the Caribbean--a newborn non-governmental and multi-stakeholder bi-regional organization--as a top priority."

A: Cecilia Porras Eraso, president of the Arab Colombian Chamber of Commerce: "It is of vital importance for countries in the region to strengthen relations with the countries of the Middle East and North Africa. The privileged geographic location, the biodiversity, the wealth of natural resources and the potential for development of food reserves in Latin America increase Middle Eastern countries' interest in the region. The signing of APIs (Acuerdos de Protección de Inversión) with Qatar and the United Arab Emirates has been the first step for Colombia, attracting investors' attention. There are a number of regional and bi-regional players. One is the Cooperation Council for the Arab States of the Gulf (GCC), a political and economic union of the six Arab states on the Persian Gulf. The objectives are the formation of similar regulations in diverse fields such as the economy, finances, trade, customs, tourism, legislation and administration. An expanded and unified GCC market would offer new trade and investment opportunities. Another is the Summit of South American-Arab Countries -- Federation of Arab-South American Chambers of Commerce, of which CCAC is a founding member. It is playing an important role in the increase of South-South relations, conducting various activities to encourage cooperation. It includes 34 nations, 12 in South America and 22 Arab countries, who have expressed the desire to negotiate economic agreements. A third is CARLAC, the Consejo Para las Relaciones Entre el Mundo Árabe y América Latina y el Caribe, a council comprised of more than 40 leaders from Latin America and the Caribbean and the Arab world. There are four main areas of cooperation: trade; investment; industrial cooperation: small- and medium-sized enterprises/ small industries; and technology transfer in agriculture, energy, mining and metals. An in-depth understanding of the mechanics and dynamics of the GCC countries should help Latin America--both governments and the private sector--to formulate a winning strategy for success in the region and individual countries. In view of the current economic problems in Europe and the United States' approach in politics, business opportunities abound for two-way trade and investment."