Gulf countries gathered yesterday and today in Lima, Peru, to focus on economic ties at the third summit of heads of state and government of South American and Arab countries (ASPA).
Gulf embraces Latin American flavours as trade triples
When representatives of Arab and South American countries convened their first joint-regional summit four years ago, there were no direct flights and trade between the two regions was US$11 billion (Dh40bn) annually.
Now, Emirates Airline offers two direct flights to Brazil and one to Argentina, as does Qatar Airways; and Etihad Airways will launch its own Sao Paulo route next year. Annual trade between the Middle East and South America has nearly tripled, to $30bn, and more South American companies and embassies are emerging in the Gulf.
"I think the Arab world has awakened to the Latin America world in the last five years," said Roberto Velez, Colombia's ambassador to the UAE. "You have Europe in a very delicate situation economically, and the United States' economy is not doing great either. We truly believe that these next 10 years will belong to Latin America."
Gulf countries gathered yesterday and today in Lima, Peru, to focus on economic ties at the third summit of heads of state and government of South American and Arab countries (ASPA). Thirty-four countries are expected to attend the summit, including heads of state from Lebanon, Tunisia, Qatar, and Jordan, as well as Argentina, Brazil, Colombia, Chile, and Peru.
South American countries are eager to attract capital from Gulf Cooperation Council countries such as the UAE and Qatar to fund infrastructure and other development projects. The World Bank expects the South American and Caribbean region to grow between 3 and 4 per cent in 2012, though several individual countries - including host Peru - are predicted to double that pace.
This year, four countries - Brazil, Mexico, Peru and Colombia - are expected to undertake infrastructure projects such as mass transit and natural gas infrastructure worth about $136bn, according to data from CG/LA Infrastructure consultants, based in the US and Brazil.
Meanwhile, investors from the Arabian Peninsula are keen to get on the ground floor of the continent's real estate, agriculture, and energy markets. Kuwait, Qatar and the UAE are interested in signing investment agreements with Peru, that country's state news agency reported yesterday.
Agriculture is a particular area of interest for Gulf countries, which import as much as 90 per cent of their food.
"The GCC is interested in investing in agriculture overseas for the sake of food security, while Brazil has some of the most advanced agricultural technology in the world," said Jane Kinninmont, who follows regional economies for Chatham House, an independent policy institute based in London.
Brazil alone accounted for 85 per cent of Latin American trade with the GCC in 2009, thanks largely to food exports, according to a recent report by the Economist Intelligence Unit. One-third of Brazil's poultry exports head to the Middle East, where they fill a niche in the halal market.
In recent years, Gulf countries have experimented with leasing farmland in countries such as Sudan, Nigeria, and Turkey, to provide reliable import sources for staple crops.
"Potentially these countries could even cooperate to generate high-yielding agricultural investments in third countries, by combining the Gulf's capital with Brazil's technology," said Ms Kinninmont.
Barriers to exchange may also come up at the summit, including disagreements over trade regulations. Many South American countries have been reluctant to sign double-taxation agreements that would allow South American citizens and companies to avoid national taxes while living abroad.
Meanwhile, the GCC's petroleum exporters have pushed for lower import duties on the commodities in South America.
"We still have a lack of knowledge between the two regions," said Mr Velez. "We need continuous exchange between the head of state and the business community to get to know each other."