Lorenzo Servitje founder of the Grupo Bimbo Passes Away

Lorenzo Servitje founder of the Grupo Bimbo Passes Away

En nombre del Presidente del Instituto de las Américas y su Junta Directiva, lamentamos profundamente el fallecimiento de Don Lorenzo Servitje, fundador del Grupo Bimbo. Además de ser un orgulloso Mexicano que construyó un negocio reconocido globalmente, Don Lorenzo se caracterizaba por ser un hombre humanitario y visionario. De hecho, Don Lorenzo apoyó la iniciativa del Embajador Ted Gildred, fundador del Instituto de las Américas, de ser miembro de la Junta de Gobernadores Fundadores del Instituto.  “Aún hace 33 años, Lorenzo tenía clara la importancia de fortalecer los lazos entre los países y las economías de las Américas… él tenía la convicción de que servímos mejor a nuestras comunidades y ciudadanos a través de mayores alianzas y colaboración”, relata el Embajador Gildred.
Nuestras sentidas condolencias para la familia y amigos de Don Lorenzo, así como para el Grupo Bimbo.

On behalf of the Institute’s President Jamal Khokhar and its Board of Directors, we are profoundly saddened with the passing of Lorenzo Servitje, founder of the Grupo Bimbo. Beyond being a proud Mexican who created a globally recognized business, Don Lorenzo was known for his humanity and vision.  Indeed, Don Lorenzo took up the invitation of Ambassador Ted Gildred, founder of the Institute of the Americas, to serve on its Founding Board of Governors.   “Even 33 years ago, Lorenzo understood the importance of bridging the countries and economies of the Americas…he stood for that vision that we serve our communities and peoples better through deeper collaboration and partnerships”, recounted Amb Gildred.
Our sincerest condolences go out to Don Lorezo’s family, friends and Grupo Bimbo.

Chile’s Energy Agenda One Year On

Chile’s Energy Agenda One Year On

Under smoggy skies and against the backdrop of a persistent drought, the Institute of the Americas convened its Chile Energy Roundtable on June 23 in Santiago.

Almost one hundred attendees from across the Americas and Europe gathered in Chile to take stock of President Bachelet’s “Energy Agenda” one year after its launch. The principal themes of energy efficiency, interconnection of Chile’s two power systems, as well as with its Andean neighbors, and the need for improved dialogue and policies for community and energy project development made for robust discussions.

A panel focused exclusively on the issue of energy efficiency underscored the long path to finding common ground among the many disparate players. Panelists also drew attention to areas beyond the electric sector, with transportation and heating inefficiencies cited as the most urgent cases. Moreover, the need for an interdisciplinary approach across the entire value chain and policy making infrastructure was abundantly clear. The role for advancing an appropriate efficiency strategy and law should include all segments of the economy and government.

During his keynote address, Energy Minister Maximo Pacheco lauded the progress the government and his ministry has made over the last 12 months on the goals of the Energy Agenda. Specifically, 11 new projects totaling 2000 MW have been approved and added. A major imperative of the Energy Agenda, reducing energy prices had been achieved according to Minister Pacheco. Indeed, the latest power auction saw a 17 percent reduction in bid prices. Additionally, the long-awaited interconnection of Chile’s SIC and SING electric grids has been contracted and should be completed before the end of President Bachelet’s term.

But during the discussion, the minister too was quick to emphasize that the electric sector is not the sole target of the aims to reduce energy consumption and increase conservation. Indeed, he emphasized that energy efficiency is not synonymous with electric efficiency. He highlighted the role of biomass and transport in the government’s efforts. Minister Pacheco indicated that the government’s energy efficiency law would be finalized and submitted to Congress before the end of the year.

The minister further underscored the need to improve the government’s efforts when it comes to the national discussion of energy issues, not just on the topic of conservation but also vis-à-vis community concerns and the so-called issue of “asociatividad” in Chile. Communicating on energy matters, insuring equitability and making them clear and understandable for all stakeholders is a challenge that the government will continue to confront, he said.

ENAP General Manager, Marcelo Tokman, closed the event with a detailed update on the strategic outlook and role for the national oil company. Tokman discussed the efforts to recover the financial viability of the company, as well as progress on unconventional resource drilling and development in the Magallanes region and its significance for the company’s reserve replacement and that region’s energy supply.

But it was the affirmation of the strategic role for ENAP in terms of Chile’s natural gas and liquefied natural gas market, as well as its effort in power generation that underscored the progress made in line with the role for ENAP as set forth in the Bachelet government’s Energy Agenda.

Oil Price Volatility and Energy Security Questions Dominate La Jolla Conference

Oil Price Volatility and Energy Security Questions Dominate La Jolla Conference

In the lead up to this year’s La Jolla Conference, the energy world was rocked by the return of volatility in international oil markets. Promising to course through all of the agenda topics at the conference, the price of oil was indeed on the minds of attendees.

But the specter of lower oil prices that seemingly threatened to overshadow all other energy trends in 2015 has not entirely played out. The US shale revolution bubble has not burst nor does it appear that price issues alone will seriously undermine Mexico’s Round One oil and gas auction. And renewable energy projects are not being mothballed.

Dropping rig counts in the United States has not led directly to corresponding declines in production, and exports of liquefied natural gas are set to plug the US into the global gas market beyond North America. The debate over US crude oil exports rumbles on, more a victim of the political calendar than oil prices.

Experts and panelists at the Institute of the Americas’ XXIV La Jolla Energy Conference on May 20-21 underscored Latin America’s relative competitiveness in spite of the current downturn. Several speakers were quick to emphasize that this is not your father’s oil price collapse.

On the other hand, there is surely near-term uncertainty facing the region’s outlook, but also several fundamentals that point to significant potential in the medium and long-term. Indeed, many panelists cautioned that in Mexico and other parts of the region, patience remains a virtue. In addition, how the region embraces and adapts the lessons from the US unconventional revolution, particularly in terms of cost and efficiency figure importantly into the mosaic of opportunities for the region’s investment and production outlook.

Whether due to the oil price downturn or not, the discussions that surrounded the understanding of the regional energy context and what could perhaps be called the aura of competition across several key energy markets were intriguing. The newly installed head of Colombia’s regulator, ANH, minced no words when he noted that Colombia had to do a better job competing for and retaining investors, particularly as Mexico moves forward with its Round One auction.

Representatives from Mexico, which was a bit maligned at the conference for its increasingly bureaucratic implementation of the nation’s energy reform, also made great efforts to highlight the interest and attractiveness of the three calls offered to date. A representative of the country’s hydrocarbon commission, CNH, also spoke to efforts to redress pervasive complaints over contract stipulations and terms, revisions due out only days after the La Jolla Conference.
But beyond oil prices and competition, it bears noting that energy security has become more important than ever in the region. Countries are focused on efforts to refine domestic energy markets through offshore exploration, unconventional resources, efficiencies in power generation, and revitalized and improved energy integration.

Additionally, confronting above ground or non-technical risks that stem from environmental and community concerns and institutional weaknesses have quickly ascended the list of priorities for policy makers and industry.
Beyond the uncontrollable element of international oil prices, if countries in Latin America are able to address many of the aforementioned issues and other concerns, there will be no shortage of opportunities for energy players and the region’s outlook should command attention. To keep a glass-half-full outlook, it is useful to recall how a panelist from US-based equity fund Carlyle Group described the potential for Mexico’s energy investment future: mind blowing.

 

Building a Sustainable Electric Market in Mexico

Building a Sustainable Electric Market in Mexico

The need for flexibility, sustainability, certainty, patience and international best practices were oft-repeated refrains by panelists at the Institute of the Americas’ Mexico Electricity Roundtable.

Almost one hundred attendees from Mexico, the United States and Central America convened on April 9 in Mexico City to discuss the outlook for the electric sector and where Mexico’s energy reform measures stood. Discussions of the draft wholesale electric market rules, the evolving regulatory framework and the role for renewables and natural gas featured prominently.

Sounding much like a management class syllabus, a deeper dive reveals that flexibility, sustainability, certainty, patience and international best practices are a useful summation of the challenges and opportunities in Mexico as it rewrites its electric rules.

The need for flexibility will become ever more apparent as the government refines the market rules over the coming months. And as one former California regulator suggested, “flexible compliance” is a concept that should inform the rules’ implementation once they are set in place on January 1, 2016.

Further, insuring that not only the first several months and year under the new rules are successful will require that the market fosters competition and thus provides sustainability.

Investors’ desire for certainty was perhaps one of the most oft-repeated intonations over the course of discussions, and with good reason. When making significant long-term investments, companies and firms desire predictability and certitude.

On the other side of the coin is the need for patience, particularly in the Mexican context of overhauling 75 years of a statist approach.

But while patience is a virtue for all involved, it should also provide the opportunity for Mexico to redouble its analysis of international best practices. What has worked and what pratfalls to avoid from across the globe should continue to inform the development of the electric market in Mexico. That is to say, continuing to move Mexico up the electric sector learning curve is crucial.

Mexico continues to make international headlines as it strives to overturn years of state control of its energy sector for a market-oriented structure. Many arguments in favor of the reform focused on the role it will play in enhancing Mexico’s competitivity and, perhaps most relevant for the general public, reducing energy costs, specifically power bills across the country.

Without a doubt, the draft market rules announced in late February have unleashed much debate and analysis. The Mexican government has provided assurances that the process is open to feedback and will represent a transparent evolution to find the most balanced and appropriate approach. The next version will be unveiled later this year and the market goes into effect on December 31.

Senior Canadian Diplomat, Jamal Khokhar, Named as IOA’s President and CEO

Senior Canadian Diplomat, Jamal Khokhar, Named as IOA’s President and CEO

LA JOLLA, California — The Board of Directors of the Institute of the Americas is pleased to announce Ambassador Jamal Khokhar as the Institute’s new President and CEO.

Khokhar, a senior diplomat with Canada’s Department of Foreign Affairs, Trade, and Development, is well known for his work on the Americas.  Currently serving as Canada’s Ambassador to Brazil, Jamal Khokhar brings a wealth of understanding, and contacts to the Institute.

IOA Chairman, Richard Hojel, noted Khokhar’s extensive experience and demonstrated track record working in the region with the public and private sectors and non-governmental organizations.

Prior to his current position, Ambassador Khokhar worked in a variety of capacities focusing on the Americas.  Early in his career, he served at the Canadian Embassy in Washington, D.C. where he was responsible for managing Canada’s relations with the U.S. Congress.  While Director General for Latin America and the Caribbean at the Department of Foreign Affairs and International Trade, Ambassador Khokhar helped craft Canada’s Strategy for Engagement in the Americas.  As Regional Director General for Latin America and the Caribbean at the Canadian International Development Agency, he oversaw Canada’s bilateral development assistance programming for the region.  In 2006, he joined the Inter-American Development Bank (IDB) in Washington, D.C. as Chief of Staff to the President and later led the creation of the IDB’s Department of Outreach and Partnerships — a department dedicated to establishing innovative partnerships with the private sector, foundations and NGOs in support of their initiatives.  Ambassador Khokhar studied at McGill University, University of Ottawa, and was a Fellow at Harvard University’s Weatherhead Center for International Affairs.  He is fluent in English, French, Portuguese and proficient in Spanish.

“The Board of Directors is pleased that Ambassador Khokhar has accepted its offer to be the Institute’s new President and CEO.  Having a new President aboard brings renewed vitality to the Institute”, said Richard Hojel, Chairman of the Institute.  “The Board looks forward to working with Jamal to chart a strategic course for the Institute addressing key challenges in the hemisphere and exploring new opportunities, while preserving our 30 year legacy.  We are confident that Jamal will lead the Institute to a bright future,” he added.

Ambassador Khokhar will conclude his duties at the Embassy of Canada in Brasilia in the coming months and will take up his new role in La Jolla over the summer.

China Strengths Ties to LATAM in Economic Policy Shift

China Strengths Ties to LATAM in Economic Policy Shift

WASHINGTON, D.C. – China is reshaping its foreign policy to become a global economic and political power, Dr. Peng Yuan, vice president of the China Institutes for Contemporary International Relations (CICIR) in Beijing, said during a March 24 conference organized by the Institute of the Americas and the Woodrow Wilson Center.

“China’s diplomacy changed substantially after President Xi Jinping came into office, from low profile to high profile” Yuan told the audience of more than 100 government officials, journalists, representatives of NGOs, scholars and students from China, the U.S. and Latin America. “We are now changing from a regional power to a world power.”

Yuan noted that Russia was the first country Xi visited after being named China’s  leader in 2012. “Our Russian relations are very visible. Why?”
“The major threats and challenges are coming from the north,” he said. “China is on the rise. Russia wants to return to its past glory. We have to find ways to resolve this security threat.”

Against that backdrop, some ask, “Where’s America?” Yuan said.  He said Xi will travel to the United States this year to meet with President Obama. Next year, it is likely that Obama will travel to China for the G-20 summit. Past meetings between the two world leaders have produced significant results, he said, such as a new code of conduct on cyber security and an agreement on measures to mitigate climate change.

Yuan noted that Xi has visited more than 30 countries since 2012. He said Xi’s “personal style plays a role in the diplomacy” but said the Chinese government is also grappling with the complex question of how to sustain the country’s economic growth.

During the conference titled, “China’s Foreign Policy in a New Era of Sino-Latin American Relations,”  Yuan introduced the idea of the “Belt and Road”, which is the core of China’s new economic diplomacy and signifies the Silk Road Economic Belt and the Maritime Silk Road.

The Silk Road Economic Belt focuses on bringing together China, Central Asia, Russia and the Baltic region of Europe. The Maritime Silk Road is designed to extend from China’s Southeast coast to South Pacific countries, North Africa and Europe through the South China Sea and the Indian Ocean, Yuan said. This new trade route, which traces the historically important international trade route between China and the Mediterranean Sea, would allow China to expand its economic influence to new markets.

“More neighbors mean more benefits,” Yuan said.

The conference also focused on latest developments in China-Latin American relations and the political and economic logic that drive Chinese engagement in the region.

Dr. Cynthia J. Arnson, director of the Latin American Program at the Woodrow Wilson Center, introduced the background context to Sino-Latin American relations. She briefed the audience on the trade volumes between the two regions and talked about the overall economic impact of China on Latin America.
Dr. Hongying Wu, director of the Institute for Latin American Studies at CICIR, focused on the six major spheres of cooperation that drive the China-Latin America economic relationship: energy, resource, infrastructure, agriculture, manufacture, science and information technology.

Wu said more Latin American goods are entering Chinese market such as Mexican Bimbo bread and Chilean wine. She also commented on the evolving U.S.-Cuba relationship, and noted that while history is being made, normalization between the two countries still has a long way to go.

Robert Daly, director of the Kissinger Institute on China and the United States at the Woodrow Wilson Center, said he believes that China is learning to be a major power on a global stage. However, he said the Chinese government-to-government and leader-to-leader style of international cooperation will be faced with Latin America’s vibrant civil society, mature legal system and free press. Moreover, he noted, China is deeply linked to some countries in the region, such as Venezuela, and regime change could pose complications to bilateral relations.

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