The growing importance of Latin America to India

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  By: Amb (Retd) R. Viswanathan
  Venue: Pondicherry University, Puducherry
  Date: March 25, 2015
  

I thank the University of Pondicherry for the invite and the vice chancellor for her presence in the lecture. Special thanks to Prof Shiv Kumar, a veteran and enthusiastic promoter of Latin America studies in India.

Through International studies, research and activities, the Pondicherry University has become a prominent window to the world in southern India. It has lived upto the dream and vision of the Puducherry poet Bharathidhasan who was global in his outlook while being proud of Tamil language, literature and culture. Two poems of Bharathidhasan illustrate his universal spirit;

Pudhiadhor ulaham seivom

Kottu Murase, ellorkum nallinbam, ellorkum selvangal, ettum vilaindhadhenru kottu murase

It is this cosmopolitan spirit of the place which has attracted Aurobindo Ashram and Auroville where people from many countries have come together to live, experiment and experience a new way of life based on harmony and peace.

Besides attracting foreigners, Pondicherry has also sent its people abroad who have made their footprints around the world, mainly in France but also in Latin America. Rajesh Vairon, a Pondicherrian has established a telecom company in Paraguay and is married to a Paraguayan. Aziz Abdul from Pondicherry is settled in Argentina owning a vineyard and making wine. He holds a French passport, married to a woman from Madagascar and speaks Vietnamese since his mother is from Vietnam. He had studied computer science and worked as an IT professional in a publishing firm in Paris before moving to pursue his passion for wine making.

Latin Americans

The people of Latin America are fascinating, friendly, warm, free-spirited, cheerful and lively.

How are they different from the Indians? It is like the difference in the characters of Malgudi (the fictional town in the novels of R K Narayan) and the those of Macondo ( imaginary town in the novels of Gabriel Garcia Marquez). Malgudians are simple and traditional while Latin Americans are colorful and complex with a touch of 'magical realism'. Some Latin Americans look like Indians in appearance with their café con leche (coffee with milk) complexion. It is this similarity which inspired a Colombian film " El Embajador de la India" ( the ambassador of India) in which a Colombian crook pretends to be the Indian ambassador. The film was based on a real life story !

How are the Latin Americans different from their northern neighbors? Although Latin America and US were discovered and colonized by the Europeans, the two regions have evolved in different ways reaching different stages of development.

North America was colonized by rebels who wanted to get away from the European oppression and sought freedom and new life. But Latin America was colonized by royalists and catholics who wanted to create a copy of their 'old world'.

Immigrants to US went with seeds and tools to work the land and create industries while those who went to the south carried swords and cross

The settlers in US were with their families and kept themselves aloof from the natives and slaves. The colonizers in the south were mostly bachelors who mixed freely with native Indians and slaves and have given rise to a colorful rainbow region.

Most immigrants to US went to settle for good while some immigrants to the south went seeking fortunes and adventures.

In US, the business philosophy was " customer is king" while in Latin America " the king was the customer". The Spanish and Portuguese kings were focussed more on getting a share of the economic gains of the immigrants through taxes.

Key to success in US is " knowhow" but in Latin America it is " know who"

Latin America has around 550 million people plus another 50 million living in US. Mexico is the largest spanish speaking country and Brazil is the largest Portuguese speaking nation. The altter is also the largest catholic country in the world.

Brazil has the largest black population outside Africa. The Afro Brazilians have enriched the Brazilian culture with Samba and Carnival. Large communities of People of African origin are in Cuba, Colombia, Haiti, Dominican Republic and Venezuela.

There are over 40 million native Americans in the region. Of this ten million are in Mexico.They constitute over 50% of the population in Bolivia and Guatemala. Evo Morales was the first native Indian to be elected as President in the history of South America.

People of Syrian Lebanese origin form important communities in most countries of the region. Carlos Slim, the wealthiest Latin American and Carlos Menem ex-president of Argentina are of Syrian Lebanese origin.

There are over a million people of Japanese origin in Brazil. Fujimori ex-President of Peru is of Japanese descent.

Argentina has the largest Jewish community in Latin America.

Besides Spanish and Portuguese, the original colonizers of Latin America there are large communities of Italians especially in Brazil and Argentina besides German settlements in most countries of the region.

Latin America

The region has 20 countries with a GDP of over 6 trillion dollars and per capita income of 12000 dollars

Nineteen out of the twenty countries are democracies and the institutions of democracy have become more stable and stronger. Political power has moved out of the barracks and oligarchic mansions to the streets.

Top-down politics has given way to bottoms-up. It is the new empowered masses who drive the political and economic agenda of the region. Obviously they elect those leaders and parties who have the agenda for their welfare. If the elected presidents fail to fulfill their promises, the masses vote them out in the next elections. In a few cases, the masses have brought down elected presidents through agiatations and protests even before the completion of their terms. This had happened in Brazil in 1992, in Argentina in 2002, in Bolivia in 2003 and 2005 and in Ecuador in 2000 and 2005. The student agitations in Chile in 2011-12 and the Brazilian protests in 2013-14 have given a shock and clear signal to the governments and the political parties that they needed to be responsible and accountable. This assetive middle class is growing in numbers, due to the decline in poverty, thanks to the pro-poor policies in most of the countries. This is good for the long term stability of democracies in the region.

The democracies have become more inclusive and representative. Previously excluded sections of the society have now come to power. The most emblematic of this is the election of Evo Morales as the President of Bolivia in 2005 and his reelection in 2009 and 2014. This is the first time in the history of Bolivia and in South America, a native Indian has become President. Although 60% of the Bolivians are native Indians, they were kept outside the political and economic positions in the last five hundred years. The election of Morales is a moment of pride and honor for the 40 million native Indians in Latin America. Another important example was the election of Lugo Fernandez, a catholic bishop without political background and a complete political outsider, as president of Paraguay in 2008. It was historic since he was able to defeat the money and muscle power of the traditional oligarchic Colorado party. Chavez and Fujimori were the other political outsiders who burst into politics from outside the established political parties and got elected as Presidents.

The democracies have become more mature. In the past, the region had suffered from ideological polarization and deadly fight between left and right in which several hundred thousand people got killed. The leftists have now become more moderate and pragmatic and less dogmatic. Even the ex-guerillas who had suffered under military dictatorship and have now become presidents did not pursue any vindictive policies towards the military or the pro-dictatorship conservatives. The centre right has become more compassionate and committed to social welfare policies. A notable example is the Progresa programme of the centre right PAN government under Vicente Fox. This is one of the pioneering pro-poor conditional cash transfer programmes in the region.

The 'Mexico Pact' signed in 2012 by all the four major political parties of the country agreeing to a consensus on urgent and crucial reforms is a remarkable example of political maturity. Under the Mexico Pact, a dozen reforms have already been carried out through legislation in the last two years. Even the US media praised this and mentioned that this could be a lesson for the partisan politics in Washington DC.

The Latin Americans have evolved their own indigenous politico-economic model called as ' Brasilia Consensus' ( also known as Lulaism) which is a balanced mix of pro-poor and business-friendly policies. Earlier they had unsuccessfully tried and failed with imported models of capitalism including the neo-liberalistic ' Washington Consensus' as well as the Soviet model. The Latin Americans are now proud to have their own model of development which is sustainable in the long term.

Economic transformation

The region has come out of the three curses of the past: hyperinflation, excessive external debt and volatile currencies and exchange rates. Average inflation of the region is in single digit for the last dozen years. External debt is just about 16% of GDP which is much better than those of many developed countries. No more reckless external borrowing. The currencies and exchange rates have become more stable and predictable.

The macroeconomic fundamentals of the region have become stronger and more solid. Monetary and fiscal policies are more disciplined and prudent. No more adventurism or experiments. The economies have become more resilient and resistant to external shocks. While banks and financial institutions collapsed in US and Europe during the so-called world financial crisis in 2008, nothing of that sort happened in Latin America. The region withstood the shock with just minor damages. Exceptions are Venezuela and Argentina which have double digit inflations, besides other economic difficulties. But both the countries have the potential and the resources to bounce back, as they had done in the past.

Regional integration

Latin American countries have realized the advantages of regional integration and have become members of one or other sub regional groups such as Mercosur, Pacific Alliance, Andean Community, SICA and Unasur. All the countries of the region, along with the Caribbean are part of the recently formed pan-Latin American group called as CELAC. The economic groupings have facilitated movement of trade, investment, capital and people.

Unasur has emerged as a forum to mediate in internal and external conflicts of member states within South America. Unasur has stood up for democratically elected governments when they were challenged by unconstitutional forces in some countries in recent years. Mercosur saved the democracy in Paraguay when there was a coup attempt by General Oviedo in 1998.

The old Latin America was a playing field for external global players. It was even dubbed as the ' backyard of US'. But the New Latin America is more autonomous, independent and assertive in the global stage. Some of the countries voiced their concern loudly in support of Palestine recently drawing the attention of the world.

The region has successfully diversified its economic and trade partnership and reduced its dependence on their traditional partners. Asia has emerged as a major trade partner, investor and source of credit for some countries of the region. China is the largest trading partner for some countries like Brazil, Chile and Peru.

India and Latin America

In the past, the relations were insignificant due to the 'barrier' mindset. Indians considered distance and language as barriers. But now two dozen Indian IT/BPO companies use distance and language as advantages in their new business model of operating in the region with 25,000 Latin American staff.

This New Latin America offers opportunities for Indian business and the government. The trade which was 42 billion dollars in 2013 could reach 100 billion by 2020. The growing middle class offers scope for increase in India's exports. Latin America has emerged as a source of crude oil accounting for nearly 15% of India's imports. Given the large reserves in the region and the keenness of the governments targeting India as a long term market, India can count on Latin America as a contributor to its energy security. With its large surplus arable land, abundant water reserves and modern and efficient large-scale forming South America is emerging as an Agricultural Powerhouse of the world. This is in contrast to India which faces growing population, reduction in farmland and water scarcity. South America can complement India with supply of edible oil, pulses and other agriproducts in the long term. Latin America which is rich in mineral resources can supply copper, gold, coal and other minerals to fuel India's high economic growth in the coming years.

There are over 100 Indian companies which have invested around 12 billion dollars in a wide range of fields such as IT, energy, pharmaceuticals, chemicals, vehicles, auto parts, two wheelers, sugar, mining, cosmetics, metals, plastics, electrical products and resort hotels. The most visible Indian investment in the region is the presence of two dozen Indian IT companies which operate with 25,000 Latin American staff in 14 out of the 20 Latin American countries including small countries such as Uruguay, Costa Rica and Guatemala. TCS is the leader with 12,000 staff in eight countries of the region. The Latin Americans value the contribution of the Indian IT companies to human resource development of the region through training and skill development.

Twenty Latin American companies have invested about one billion dollars in India in steel, multiplexes, bus assembly, auto parts, electric motors, IT and even cola drinks.

The Latin American governments have become more assertive and independent in foreign policy and they strongly believe in a multipolar world. Their worldview and interests coincide with India's global agenda in many areas. India has worked with many Latin American countries in G-20 and other multilateral and global forums for common goals. India has established strategic partnership with Brazil and the two have many common aspirations including permanent membership of UNSC.

Young Indians have started learning salsa and enjoy Latin American music, dance and culture. Spanish has replaced French as the most popular foreign language in India after English. The Latin Americans are enthusiastically pursuing yoga, meditation, ayurveda and follow Indian gurus and spiritualism. The Latin Americans look at India as an emerging global power, large and growing market, an IT powerhouse and an important investor.

The New India and the New Latin America are mutually attracted to each other's promise and potential and have started developing long term partnership with systematic policies.