Jorge Sahd thanked the Chamber and the Finance and Capital Markets Committee for the invitation, a meeting held on Tuesday, June 4, 2024, at the NLD Offices. The report presented by Jorge Sahd, Director of the Center for International Studies of the Pontifical Catholic University of Chile (CEIUC) and Co-editor of Political Risk, provided a detailed view of the most significant political risks facing Latin America, based on the Political Risk Index of the region. This report, which is in its fourth year, highlights the importance of the issue of political and geopolitical risk in the field of business, and how it has become increasingly relevant in the business world.

He commented on the growing concern regarding social threats, geopolitical instability, terrorism and climate change, mentioning the Wilson Center’s recent Climate Risk Index. He highlighted the importance of political stability as a critical factor in foreign investment decisions in Latin American countries, even above macroeconomic stability and other factors.

He spoke about the need for a specific political risk index for Latin America, given that global indices tend to offer a more general and less detailed analysis of the region, with the exception of Brazil. The ranking presented by the report of the Center for International Studies of the Pontificia Universidad Católica de Chile (CEIUC) is made up of 10 points:

1. Organized crime, insecurity and drug trafficking.
2. Increase in corruption and impunity.
3. Democratic disaffection, advance of populism and authoritarianism.
4. Governance under pressure and rapid loss of support from leaders.
5. Increase in migratory flows.
6. Radicalization of social protests.
7. International instability.
8. Deterioration of the business climate.
9. Impact of technology on politics.
10. Vulnerability to climate change.

He highlighted that political stability continues to be the main factor in foreign investment decisions in the region. As for the headlines for Latin America in 2024, he mentioned a greater ideological balance rather than a clear left or right trend, highlighting examples such as the change of government in Argentina and Mexico. He also mentioned the importance of the economy and security, noting an increase in concern about organized crime and governance in the region.

In the subsequent discussion, topics such as the impact of the pandemic on governments and the economy, the need to address organized crime, corruption and drug trafficking as a priority, and the complexity of finding effective solutions in this area were addressed. The erosion of democracy in the region, the increase in corruption and impunity, and the democratic retreat in some countries were also discussed.

Specific cases were mentioned, such as the increase in political violence in Mexico, concerns about corruption in countries such as Uruguay, Chile and Costa Rica, and democratic disaffection in the region. The importance of addressing structural problems that affect economic growth in Latin America, such as lack of investment and low productivity, was also highlighted.

Sahd addressed the political situation in Argentina, mentioning the government’s inability to establish a solid public agenda. It highlights the challenge of the opposition and the political tolerance of Argentine society. He refers to the figure of Miley as a political phenomenon who has managed to attract attention and maintain economic stability, although she faces political challenges.

Then, he addresses the situation in Chile, highlighting the country’s economic sensitivity and the migratory pressure from Venezuela.
Turning to Venezuela, Sahd points to uncertainty surrounding upcoming elections and the risk of increased migration if Maduro remains in power. It highlights the regional impact of the Venezuelan crisis and the emergence of xenophobic sentiments in some countries receiving migrants.

It also addresses radicalization and social violence in several countries in the region, such as Brazil, Peru and Panama. It points out the importance of addressing the underlying causes of these conflicts to prevent their escalation.

On the international stage, Sahd discusses the trade war between the United States and China, as well as the geopolitical risks associated with cybersecurity and climate change. It highlights the impact of these issues on the global economy and the need to address them urgently.
The discussion also focused on the presidential elections in the United States and its possible impact on international politics and trade relations, especially in Latin America. The possibility of more protectionist policies by the new administration was raised, which could affect the global economy and relations with Latin America.

The issue of growing Chinese foreign investment in the region was addressed, highlighting the importance of evaluating the associated risks, especially in terms of national security. The need to find a balance between economic pragmatism and the protection of national interests was emphasized. Sahd addressed the sale of energy assets in Peru to a Chinese consortium, highlighting how this type of transaction is shaping a complex panorama in Latin America. The lack of clear regulation in the region was mentioned, which could lead to political control over foreign investment.

The need to evaluate foreign investment in terms of national security and compliance with sectoral laws was discussed. The pragmatic role of China in its investments in the region and the importance of balancing relations with global powers such as the United States and the European Union were highlighted.

Specific cases of Chinese investments in Chile and Brazil were discussed, and how these countries are trying to protect their strategic interests, especially in sectors such as energy and agriculture. The importance of diversifying Latin America’s commercial and diplomatic relations was mentioned, including rapprochement with countries like India.

The conflict in Gaza was addressed and the lack of a credible plan to resolve the situation was discussed, as well as the geopolitical implications of this conflict for the region. The influence of social networks on public perception of international conflicts was highlighted, and how this can influence the foreign policy of countries.

Regarding the conflict between Israel and Palestine, the lack of a viable political solution and the importance of moving towards the creation of a Palestinian state were noted. The role of Chile on the international stage was discussed, which despite changes in government has maintained a coherent foreign policy that promotes peaceful coexistence and respect for international law.

The implications of the conflict in Gaza on public opinion and domestic politics in Chile were also mentioned, especially with regard to support for Israel and Palestine. The importance of maintaining a balanced and coherent approach to foreign policy was highlighted, despite internal and external pressures.