Holas, Salaams, and a Touch of Drama

I had my eye on the second Arab-South American summit taking place in Qatar yesterday, and not just for the entertainment value (though, given the personalities involved, that sure earned it some bonus points). But since the media reports coming out of Doha were all focused on those big personalities, I decided to ask Bertrand Delgado, a senior economist at Nouriel Roubini's RGE Monitor, about what he was seeing on the econ front.

Baby steps toward independence, he said. South Americans have long wanted to step out from the U.S. shadow. In recent years, with about $4 trillion in GDP behind them, left-leaning governments like Brazil, Venezuela, Bolivia, Chile and Argentina are finding that's finally possible. And these days, as rest of the world is making the region seem like a model of economic stability (which is really saying something), they have plenty of reason to court new friends.

The Arab League, for one, has taken note. That's especially good news for South America, Delgado told me, since Arab governments are sitting on enormous capital reserves--a mouth-watering treasure chest for countries with a long tradition of spending rather than saving (here's lookin' at you, Argentina). What's more, Arab countries are big food importers--so much so that certain Gulf countries have begun buying up farmland in Africa to sustain their consumption. For Argentina and Brazil, which have more corn, soy, and wheat than they know what to do with, that's gold. In fact, in the three years since the first summit, Brazil's trade balance with the Arab world shot up from $8 billion to more than $20 billion. Argentina's climbed from $1.8 billion to $4.5 billion. And Chileans, who import about 90 percent of their oil, have reasons of their own to cozy up to the Middle East.

As expected, yesterday's summit produced more grandstanding than it did specifics (did I mention the entertainment value...?). Leaders broadly called for increasing trade, removing tariffs, setting up an Arab-South American bank, facilitating visas, and--of course--taking on the developed world. And what about that developed world? As Mac Margolis, my colleague in Brazil, reported recently, young Latin Americans are big Obamaniacs and much more accepting of free trade ideas than their parents. Delgado says the Obama team has already begun to change minds in South America about rebuilding relations with the States. But, he added, they have a long way to go in tamping down on protectionism and bolstering dialogue if they're going to woo the region back. It might be a good time to start.