When it was first coined in 2001, the term ‘BRIC’ seemed little more than a quirky acronym. Since then, the term has quickly become universal shorthand for the emerging markets’ ascent in the global economy.
Brazil, Russia, India and China – and South Africa since it joined the fold in 2010 – have all come a long way since former Goldman Sachs Chief Economist Jim O’Neill first spotted their potential 14 years ago. Despite riding out the global financial crisis remarkably well, the mighty BRICS have not been left completely unscathed. The average growth rate of each country has slipped by more than two percentage points over the past decade.
At a recent IBA conference, From BRICS to MINT… and Beyond!, O’Neill said that China was the only one of the original BRICS that hadn’t disappointed him, clocking an average growth rate so far this decade of eight per cent. Although he acknowledged weaker commodity prices were partly to blame for poorer performances in Brazil and Russia, he maintained his view that rule of law is vital for economic success. If all these countries can ‘succeed in doing all the things that are necessary for rule of law, then they’re going to get somewhere’, he says.
After years of negotiations behind closed doors, the US and Cuba finally brokered a deal last December, which saw the release of US government contractor Alan Gross and three Cuban agents convicted of spying on anti-Castro groups in Miami.
The significance of the move cannot be underestimated. Fernando Peláez-Pier is a former IBA President and a partner at Hoet Peláez Castillo & Duque in Caracas. He says:
‘It has been an enormous step to take the decision to re-establish diplomatic relations between the US and Cuba and to lift the embargo in the short term, although it is not yet envisioned that it will lead to a reopening of embassies in each country.
‘This is the most important decision since Carter and Castro decided to establish representation of each country’s interests in Havana and Washington. It’s the beginning of a new era in the relations between both countries, marking a before and an after.’
However, the process is far from over. ‘Whoever thinks this process will be fast would be mistaken and would fail to understand the complexity of the case and what it implies for the re-establishment of relations between two countries after more than 50 years,’
As images of the terrorist attacks that paralysed France at the start of 2015 reverberated around the world, thousands of miles away, in the south-western Mexican state of Guerrero, families were still waiting for accountability regarding the biggest massacre in the country’s recent history.
On 26 September 2014, more than 100 students from a teacher-training college in Ayotzinapa were taking part in a peaceful protest against alleged discriminatory hiring practices in Iguala, when a number of them clashed with local police and were bundled into police cars. The exact chain of events that ensued is still unclear, but it soon became apparent that 43 of the students had vanished without a trace.
Large-scale protests against corruption and violence erupted across the country after a mass grave was discovered on the outskirts of the city. Some of those police officers involved (who have since been arrested) told investigators they handed students over to the drug cartel Guerreros Unidos.
Gripped by high inflation, chronic shortages and an ever-widening fiscal deficit, Venezuela a year ago was not a pretty picture. But after 12 months that have seen further unrest, currency devaluations, a dramatic slump in oil prices and a bitter stand-off between the government and international airlines, turmoil has taken on a whole new meaning in Venezuela.
‘The economic situation in Venezuela has worsened considerably since measures have not been taken to resolve the main problems affecting the country,’ says former IBA President Fernando Peláez-Pier, a partner at Hoet Peláez Castillo & Duque in Caracas.
Despite indications that Nicolás Maduro’s government was taking action to combat the crisis, ongoing shortages of basic food, medical supplies and foreign currency – not to mention the estimated $12bn a year the government is spending to subsidise domestic gasoline sales – have pushed the economy to breaking point.
The threat of default has loomed large again for Argentina in recent months. It went right down to the wire on 30 July when it became clear that a deal wasn’t going to be reached. For the eighth time in its history the country slipped grudgingly into default, making it one of the world’s most recidivist sovereign defaulters.
First, some context: The payment problems this time stem from Argentina’s mega-default in late 2001 when the country defaulted on $95bn in government bonds. Holders of around 92 per cent of those bonds accepted restructurings worth about $0.30 on the dollar, but the remaining bondholders – a group of US-based hedge funds led by billionaire Paul Singer’s Elliott Management – refused to accept the restructuring, demanded payment in full for old bonds that weren’t exchanged and sued for full payment.
A decade-long legal battle ensued and in July President Cristina Fernández de Kirchner’s government refused to abide by the decisions of the US courts and pay the holdouts, effectively locking Argentina out of the global capital markets altogether. Thus it was with good reason that tensions were high on 30 July as the culmination of the lengthy dispute saw US District Court Judge Thomas Griesa side with the hedge funds and duly freeze a $539m interest payment from Argentina, ordering the country not to make any payments on new bonds before it paid for its previous payments, plus interest.
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