Poor Energy Policies in Latin America May Do More Damage Than U.S. Financial Crisis

Many are asking how the U.S. economic downturn will affect Latin America and the Caribbean. Here’s the good news: high commodity prices, enhanced diversity and global trade should combine to minimize the impact of the global downturn on most major economies in the region.

However, countries that may find themselves hardest hit are those that have been hijacked by irresponsible leaders who are trying to swim against the tide of market forces.

For example, too many governments have adopted policies that discourage investment in this key sector which holds so much promise for countries rich with energy potential:

• Price controls in Argentina have sown the seeds of disaster in that country, just as its economy is seeking to consolidate its recovery.

• Bolivia’s self-inflicted political woes have discouraged foreign investment, despite the desperate need for vast amounts of capital and specialized technology that will be needed to exploit and market its impressive deposits of natural gas.

• Venezuela’s state-owned oil company has been wrecked by President Chávez, who has replaced able technocrats with partisan loyalists and squandered billions in revenue in unaccountable and overtly corrupt spending at home and abroad.

• Mexico’s polarized politics, populism, and nationalism have stalled even the tentative reforms proposed by President Felipe Calderón to open its under-performing sector to foreign investment and technology.

Even nations rich in oil or other commodities may pay the price for irresponsible leadership. Their future is in their own hands.

Ambassador Roger Noriega is former Assistant Secretary of State for Western Hemisphere Affairs under President George W. Bush.