Former OAS Ambassador Pushes Investment in Latin America by Larry Luxner MIAMIóLuis J. Lauredo, Washington, D.C.ís former ambassador to the Organization of American States (OAS), has some timely advice for you: Invest in Latin America. Since leaving his diplomatic post last July, the Cuban-born Lauredo has made a career of advising big U.S. and European multinationals that already do business or are contemplating doing business south of the Rio Grande. The Washington Diplomat caught up with Lauredo at the Miami office of Hunton & Williamsóone of the nationís oldest and largest law firmsówhich hired him as a non-legal consultant for its Latin American Practice Group. Since its establishment three years ago, that group has represented at least 80 companies and two governmentsóHonduras and El Salvadoróin more than 130 business transactions. These range in value from a $5 million joint venture between Spectrum Telecommunications Inc. and Chileís World Access Inc. to the $12.5 billion merger between Terra Networks S.A. and Lycos Inc. ìI think the b iggest challenge now is to convince U.S. companies to stay the course,î Lauredo said. ìBusiness cycles come and go, and clearly Latin America is going through a down cycle. Itís important to have a long-term view because investing in Latin Americaówhich is the most developed of the developing worldórepresents an enormous opportunity.î Among Hunton & Williamsís most important clients with business in Latin America: cigarette-maker Philip Morris Inc., Brazilian cellular operator BCP S.A. and energy giant GPU International. Other companies that have paid for Lauredoís advice include ABB Energy Ventures Inc., Telecom Italia, Schering-Plough Corp., Deutsche Bank and the International Bank of Miami N.A. ìWe represent a lot of family-owned businesses,î Lauredo said. ìYouíd be surprised how much active Latin American capital is in the United States as opposed to passive investments like bank accounts.î Lauredo was born in the Cuban port city of Matanzas and left the island in 1962, never to return. He went to Columbus High School in Miami, then Columbia University in New York, where he graduated in 1972 with a bachelorís degree in political science and economics. He has also studied at Georgetown University Law Center in Washington, D.C., and at the University of Madrid. Besides representing the United States at the OAS, Lauredo has served as senior vice president of the U.S. Export-Import Bank and has represented the United States at the inaugurations of the presidents of Colombia, Costa Rica, Brazil and Venezuela. Heís been honored as one of the nationís top-100 influential Hispanics by Hispanic Business magazine and has chaired the Miami Cultural Affairs Council and the Sister Cities Council. More important, Lauredo was the U.S. coordinator for the Summit of the Americasóa gathering of 34 elected heads of state of the Western Hemisphere held in April 2001 in Quebec City. In fact, the only leader not invited to the summit was Cubaís Fidel Castro. ìI donít want to meet him,î said Lauredo whoóas head of the Cuba Commission of the Council of Foreign Relationsóhas been invited many times to Cuba but wonít go as long as Castro remains in power. Since entering professional life, he said, ìitís the only country in this hemisphere I havenít been to.î Lauredoís 25th-floor office, which looks out onto Miamiís Biscayne Bay, is filled with mementos of his childhood in Cuba as well as his years in Washington, D.C. On the wall are antique maps of La Habana Vieja, along with framed articles from El Nuevo Herald and autographed pictures of the former ambassador with President Bill Clinton, Secretary of State Colin L. Powell and other dignitaries. ìIím a Clinton appointee and the only Democrat that Bush asked to stay on when he came into office,î said Lauredo, who singled out three of his fellow ambassador friends in Washington for particular praise: Argentinaís Diego Guelar, Uruguayís Hugo Fern·ndez Faingold and Ecuadorís Ivonne A-Baki. In fact, Lauredoís personal contacts are what make him an ideal addition to the Latin American Practice Group at Hunton & Williams, which already has more than 850 lawyers in 17 offices, including 40 lawyers in its Miami office. The law firm says its strength is based on the ìvaried intellectual and cultural outlook and the real-life international experienceî of its attorneys and other professionals. ìClients need more than just having legal contracts drafted,î said Lauredo. ìThey need to know what the political landscape is, and they need to get an overall macroeconomic view of the country. This helps them form effective business relationships and identify the right groups for joint ventures.î Asked to talk about specific countries, Lauredo said that Argentinaówhich is in the midst of its worst economic crisis in historyóoffers ìsome of the best investment opportunities pricewise in this hemisphere. ìA lot of U.S. companies are bailing out of there, particularly in energy and telecommunications,î he said. Argentine real estate is also lucrative, with luxury apartments in the Recoleta district of Buenos Aires that cost $400,000 only a year ago now going for only $100,000. ìA lot of people are desperate for cash. But the key is to have a long-term view and to invest in the field that youíre an expert in.î Lauredo added that ìone of the greatest investments throughout Latin America is in agriculture. We always tend to go toward these sexy things, and yet agriculture is the fundamental basis of wealth because people have to eat.î Another opportunity is Venezuela, although the recent failed attempt to overthrow President Hugo Ch·vez can only mean bad news for investors in the short term, Lauredo said. ìVenezuela has a democratically elected government that has drifted increasingly toward totalitarian behavior, confrontational politics and mismanagement, triggering a growing dissatisfaction among the people,î Lauredo explained. ìThis was reflected in Ch·vezís low popularity rankings and the street demonstrations that led to the attempted coup. I think the Latin American democratic community was appalled not at the possibly justifiable constitutional transfer of power, but by the irresponsible and incompetent behavior shown by the interim president, Pedro Carmona, who tried to abolish the constitution.î Lauredo continued: ìObviously it sends a very bad message for the investment community. On the other hand, people need to be aware that the United States has very serious strategic interests in Venezuela because itís our third-largest supplier of oil. It was a terrible mistake to tinker with PDVSA [state-owned oil company PetrÛleos de Venezuela], the jewel in the crown, the one institution in Venezuela that was efficiently managed.î The former diplomat warned that corruption is one of Latin Americaís biggest problems ìbecause it undermines public confidence and enhances instability, and is a deterrent to investment. Besides all the moral issues, itís also highly inefficient. Corruption throws a monkey wrench into the economies of Latin America.î Asked to name the most corrupt country in Latin America, Lauredo referred to a recent ranking by Transparency International, a global coalition against corruption, which put Ecuador at the bottom of the barrel. Asked to name the most honest country, he answered without hesitation. ìChile,î he said. ìThatís why itís the most stable and the most attractive country for investment, and why it has the best overall macroeconomic situation in Latin America.î Yet the country with the highest annual growth in gross domestic product over the last 10 years has been the Dominican Republic. Although per-capita income there has risen substantiallyófrom around $700 a decade ago to more than $2,000 todayópoverty remains pervasive in the Caribbean nation. ìItís all macroeconomic growth,î Lauredo said, naming low-budget tourism and apparel exports as the countryís leading sources of revenue. ìIf itís not trickling down, then somethingís not adding up. Two and two is not adding up to four. So itís got to be corruption.î Larry Luxner is a contributing writer to The Washington Diplomat.