energy advisor - Inter-American Dialogue

13 downloads 155 Views 160KB Size Report
Aug 14, 2015 - Service Company (JPS) said Aug. 7 that it has signed an LNG-supply agreement with United States- based Ne
LATIN AMERICA ADVISOR

ENERGY ADVISOR A PUBLICATION OF THE DIALOGUE

www.thedialogue.org BOARD OF ADVISORS Mary Rose Brusewitz Partner, Strasburger & Price Jeffrey Davidow Senior Counselor, The Cohen Group Ramon Espinasa Consultant, Inter-American Development Bank Luis Giusti Senior Advisor, Center for Strategic & International Studies

For the week ending August 14, 2015

FEATURED Q&A

TOP NEWS

How Are Reforms Reshaping Mexico’s Retail Gas Sector?

Jonathan C. Hamilton Partner, White & Case

JPS Inks LNG Deal With New Fortress Energy

Jorge Kamine Counsel, Skadden Arps

Mexican retailer and bottler Coca-Cola Femsa said earlier this year it plans to expand into retail gasoline as energy reforms end the monopoly of state oil company Pemex. // File Photo: Matthew Rutledge.

Craig A. Kelly Director, Americas Int’l Gov’t Relations, Exxon Mobil

Q

Charles Shapiro President, World Affairs Council of Atlanta R. Kirk Sherr President, Clearview Strategy Group Garrett Soden Director, Etrion Corporation Mark Thurber Partner, Andrews Kurth Alexandra Valderrama Manager, International Government Affairs, Chevron Lisa Viscidi Program Director, Inter-American Dialogue Max Yzaguirre President and CEO, The Yzaguirre Group

President Dilma Rousseff announced Tuesday that the government plans to sign contracts worth 186 billion reais ($53 billion) for energy generation and transmission projects over the next three years.

OIL & GAS

James R. Jones Co-chair, Manatt Jones Global Strategies

Larry Pascal Chairman, Americas Practice Group, Haynes & Boone

Brazil Launches $53 Billion Energy Investment Plan

Page 2

Raul Herrera Partner, Corporate & Securities Practice, Arnold & Porter

Jeremy Martin Director, Energy Program, Institute of the Americas

POWER SECTOR

Mexican retailer and bottling company Femsa said in July that it will move aggressively to expand into retail gasoline as the country’s energy reform, which was finalized late last year, opens new opportunities in the market by easing controls on the creation of private gas stations and allowing the sale of gasoline not purchased from long-time monopoly supplier, state oil company Pemex. What is the outlook for Mexico’s retail gas market over the next one and five years? How are the energy reforms reshaping the market, and are new players eager to take over roles once filled by Pemex? What’s the winning strategy and who will come out on top?

A

R. Kirk Sherr, member of the Energy Advisor board and president of Clearview Strategy Group, LLC: “While the press has focused on the July bidding for upstream assets in Mexico, the real cage fight is just beginning: the battle for downstream retail assets (gas stations) in what will likely be a high-growth market over the next few years. The stakes are huge, as are the likely competitors. The Mexican downstream market today consists of some 12,000 ‘stations,’ all supplied by Pemex. These are primarily ‘mom-andpop’ shops with most retailers owning 3 to 6 stores in relative proximity. The energy reform process will allow full, open competition by 2018. Early entry efforts (next 12-18 months) will focus on marketing to gain name recognition and asset accumulation, as groups of mom-and-pop stores cash out as the larger players seek scale. Further down the road is hard to predict. First, the final, detailed permitting and licensing rules are not complete. Plus, it is not clear how the new Mexican energy institutions

Energy provider Jamaica Public Service Company (JPS) said Aug. 7 that it has signed an LNG-supply agreement with United Statesbased New Fortress Energy. Page 4

POWER SECTOR

Grupo Bal, AES to Invest $2.5 Bn in Mexico Power Sector The two companies will partner to invest $2.5 billion in Mexico’s power sector over the next five years, AES Mexico head Juan Ignacio Rubiolo said this week. Page 2

Rubiolo // File Photo: LinkedIn.

Continued on page 3 COPYRIGHT © 2015, INTER-AMERICAN DIALOGUE

PAGE 1

For the week ending August 14, 2015

LATIN AMERICA ENERGY ADVISOR POWER SECTOR NEWS

Brazil Launches $53 Billion Energy Investment Plan Brazilian President Dilma Rousseff announced Tuesday that the government plans to sign contracts worth 186 billion reais ($53 billion) for energy generation and transmission projects over the next three years, with a focus on producing power from renewable sources and reducing electricity costs, Prensa Latina reported. “With this proposal we ensure the expansion of energy supply and strengthening of the transmission system to ensure supply throughout the country with competitive pric-

Rousseff announced the energy investment program on Tuesday. // File Photo: Brazilian Government.

es,” Rousseff said at the launch of the program, known as PIEE for its initials in Portuguese. Between this month and December 2018, the government is planning auctions for 37,600 kilometers of power lines, which will account for $20 billion of the investment. The other $33 billion of planned investment will go to auctions for generation capacity. The country hopes to add between 25,000 and 31,500 megawatts to its power system, with hydroelectricity expected to account for around 11,000 megawatts of the total, Xinhua reported. Approximately 12,000 megawatts of the new generation capacity is expected to come from biomass, wind and solar projects. “One aspect that was not mentioned was the financing of these investments,” Paulo César Fernandes da Cunha, a senior consultant at FGV Energy in Brazil, said in a statement this week. “The

feasibility of the works will depend on how it will be solved, because we are going through an unfavorable economic situation.”

Grupo Bal, AES Partner to Invest $2.5 Billion in Mexico Power Sector Mexican conglomerate Grupo Bal and U.S.based power company AES Corp. on Monday launched a new partnership that will invest $2.5 billion, mostly in Mexico’s power sector, over the next five years, a top AES executive told Reuters. Three-quarters of the partnership’s five-year investment plan is slated for investment in both renewable and conventional electricity projects, with a goal of generating two gigawatts of power. “In terms of scale, the idea is to grow our portfolio in the next five years at least by two gigawatts with estimated investment of between $2 billion and $2.5 billion,” Juan Ignacio Rubiolo, the head of AES’ Mexican unit, told the news service. The rest of the investment will go toward LNG projects, water desalination and energy storage, Rubiolo said. AES, which currently has three power plants in Mexico, will operate the projects built by the partnership. AES has had a relationship with Grupo Bal, which is owned by billionaire Alberto Bàilleres, for decades and in 1997 built a power plant for Grupo Bal’s mining subsidiary, Industrias Peñoles, El Financiero reported. Rubiolo said the new alliance will pay attention to upcoming auctions by recently-created independent grid operator CENACE, which is expected to release bidding terms for new projects in October. The new partnership was first announced Monday by AES head Andres Gluski on a second-quarter earnings call with analysts. Both companies have been looking to expand in Mexico as the country’s energy market opens to private participation for the first time in decades. Last year, Gluski said the company was interested in Mexico and looking for a local partner, while Grupo Bal announced the formation of oil-sector focused subsidiary Petrobral in February.

COPYRIGHT © 2015, INTER-AMERICAN DIALOGUE

NEWS BRIEFS

Venezuela Continues Pushing for OPEC Action to Boost Oil Prices Venezuelan President Nicolás Maduro said Tuesday that his government is pushing for an emergency OPEC meeting and for coordination between the bloc of oil-producing countries and Russia as oil prices approached a six-year low, Reuters reported. U.S. crude hit a six-year low on Tuesday, while global benchmark Brent crude fell 2.4 percent to within $3 of a six-year low reached earlier this year, The Wall Street Journal reported. Gulf members of OPEC have rebuffed calls to cut output in the past. OPEC’s next regular meeting is set for December.

Five Contractors Killed in Mexico Pipeline Explosion Five contractors died Tuesday when their machinery cut through a gas pipeline, causing an explosion and fire, Mexican state oil company Pemex, which owns the pipeline, said in a statement, according to The Wall Street Journal. Pemex did not say what company employed the contractors. The explosion occurred in the northern state of Nuevo León, and Pemex said the fire was under control and that gas supplies to that part of the pipeline had been cut immediately after the accident.

Oil Spill in Central Bolivia Contaminates River A heavy machinery operator on August 7 damaged Bolivia’s Carrasco-Cochabamba pipeline, spilling nearly 400 barrels of crude, which contaminated the Magareño River and killed fish, EFE reported citing state oil company YPFB and local media reports. The spill occurred near the town of Ivirgarzama in Bolivia’s central Chapare region. YPFB said containment booms and chemical agents are being used to remove the oil from the river and that cleanup in the area will continue for the next couple of days.

PAGE 2

For the week ending August 14, 2015

LATIN AMERICA ENERGY ADVISOR F E A T U R E D Q & A / Continued from page 1

will inter-relate. Second, the playing field is not defined–for example, will 7-Eleven go head-to-head with Femsa (Oxxo stores)? Will big U.S. refiners such as Valero and Marathon Petroleum Co. aim for a piece? What will the international oil companies do? Third, downstream growth will be tied to greater investment in the mid-stream areas– pipelines and storage especially. Large-scale ‘winners’ will need a good infrastructure and logistics plan. Fourth, all of this will take place at both the local and national levels with all of the security, corruption and rule of law issues involved at both levels.”

A

Arturo Carranza, consultant at Solana Consultores: “There are more than 10,000 service stations under the Pemex brand in all of the country. By law, these stations can only sell automotive fuels that are supplied by the Mexican state oil company. The recent legislative changes in the energy sector, however, establish rules that in 2018

Even though the law has ended Pemex’s monopoly, in practice the Mexican oil company continues to be a major player...” — Arturo Carranza

will allow the private sector to have its own stations at which they can sell fuels from any private company. For this scenario of competition to occur, a real retail market for gasoline needs to be created. It is necessary to rein in Pemex and free the prices of fuels. Given the dimension of this challenge, legislative changes are not enough, and political will is required. Even though the law has ended Pemex’s monopoly, in practice the Mexican oil company continues to be

a major player in the production, supply and commercialization of fuels. Under this reality, the private sector has shown caution: the expectations for the business of refining and supplying fuels are low, and interest has centered on the opportunities that the retail gasoline market could provide. In this scenario, the companies under the Pemex brand and other investors will bet on the quality of services offered at the station. They are aware that the best way to succeed is through differentiation. In this sense, it is likely that before thinking about pricing strategies, their efforts will be focused on creating nice stations with clean bathrooms and accessible convenience stores.”

A

Benjamín Torres-Barrón, head of the energy, mining & Infrastructure practice group at Baker & McKenzie in Mexico: “The coming years will be very interesting for the retail gasoline market in Mexico. Pursuant to the newly enacted Hydrocarbons Law, in 2016, parties other than Pemex may commence installing gasoline stations and selling fuels to the general public. Furthermore, in 2017, any party will be allowed to import gasoline into Mexico (currently, only Pemex is allowed to do so) and in 2018, the price of gasoline shall no longer regulated, but will be subject to market conditions. Given the publication of the Hydrocarbons Law last August, the regulations that provide for the price of gasoline in Mexico were changed as of this year, and now the prices of retail fuels are in line with certain factors such as transportation between regions, distribution modalities, expected economic inflation and price volatility. Many companies are looking to Mexico as one of their favorite future investment destinations given the opening in the market to occur in the following years. It is expected that big oil companies such as ExxonMobil, Shell and Chevron will come to Mexico to install modern gas stations. However, Mexican investors who currently own gas stations Continued on page 6

COPYRIGHT © 2015, INTER-AMERICAN DIALOGUE

Grupo Palmas Puts Amazonian Biogas Plant into Operation Peruvian agroindustiral company Grupo Palmas on Aug. 7 put into operation a $2.9 million biogas power plant that will generate 1,900 kilowatts of energy, Géstion reported. Located in Tocache in San Martín province, the plant took nearly two years to construct. The plant is the first to provide electricity in the Peruvian Amazon from biogas, which is generated by the treatment of wastewaters from the process of producing oils. During the cleaning process, there is methane generated, which is then used to produce electricity. The power generated supplies the nearby Palmawasi Industrial Complex.

OIL & GAS NEWS

Brazil’s Petrobras Considering Sale of Minority Stake in Distribution Assets Brazilian state oil company Petrobras is in talks with three parties interested in potentially purchasing a stake in its fuel distribution unit, BR

BR Distribuidora is Brazil’s largest gas station chain. Distribuidora, ahead of a planned initial public offering of the unit, Petrobras CEO Aldemir Bendine said Tuesday, The Wall Street Journal reported. Bendine described the interested companies as “European and Asian” and said there has not been a final decision made about selling a minority stake in the unit. “This is a study, I am working with both models, the part-

PAGE 3

For the week ending August 14, 2015

LATIN AMERICA ENERGY ADVISOR ner takes a smaller stake and then we have the IPO for the rest, in a way that we keep control of the company,” he said. BR Distribuidora is Brazil’s largest gas station chain, and Petrobras’ distribution activities posted a net profit of $253 million in the first half of this year. Petrobras has said it is considering an IPO of the unit as it looks to shed assets to raise capital and reduce its huge debt load amid a massive corruption scandal. Earlier this week, the O Estado de S. Paulo newspaper reported that Ultrapar Participações, which owns Brazil’s largest natural gas distribution company, is interested in acquiring some of the assets held by BR Distribuidora, Reuters reported.

JPS Inks LNG Supply Agreement With New Fortress Energy Energy provider Jamaica Public Service Company (JPS) said in a statement Aug. 7 that it has signed an agreement with United Statesbased New Fortress Energy for the supply of liquefied natural gas to Jamaica. Under the terms of the agreement, which was approved by the Jamaican Government and the Office of

This is a historic moment for JPS and for Jamaica.” — Kelly Tomblin

Utilities Regulation (OUR), New Fortress Energy will supply LNG for JPS’ 120-megawatt power plant in western Jamaica, at Bogue, Montego Bay. The plant is being converted so that it will produce electricity from LNG instead of from more costly diesel oil. “This is a historic moment for JPS and for Jamaica,” said company president and CEO Kelly Tomblin. “JPS has worked since 2012 to procure gas as part our fuel diversification strategy. We are fortunate that we can now take advantage of technology related to gas shipments and supportive U.S. policies that allow the export of gas to nonFTA countries.” The signing of the gas-supply

THE DIALOGUE CONTINUES

Will Infrastructure Spending Be a Boon for Uruguay?

Q

Uruguayan President Tabaré Vázquez last month announced a $12.37 billion infrastructure spending plan, which includes major earmarks for roads, energy, communications and housing. What impact would the investments have on Uruguay’s economy? Is Uruguay able to afford the plan, twothirds of which is expected to come from the government? What are the main benefits and drawbacks of the investment plan? What other things should the government be prioritizing instead? Will the investment give a boost the nation’s economy, which has been affected by slowdowns in neighboring Brazil and Argentina?

A

Sergio Abreu, president of the Uruguayan Council for Foreign Affairs and former senator and minister of foreign affairs of Uruguay: “The plan seeks to help the economy reduce the risk of recession as it is becoming relatively sluggish, and several sectors are in contraction. The rate of unemployment is rising and reaching progressively higher levels while the rate of inflation is also increasing and getting close to 10 percent, and unions are rejecting the necessary accommodation of wages to an economy with fewer incentives to grow than in the past 10 years. The amount, decided agreement is the first step in beginning work on setting up the infrastructure that will allow the delivery of gas to the power plant in 2016. Earlier this year, it was announced that General Electric will retrofit the Bogue plant to use LNG. The chairman of Jamaica’s Electricity Sector Enterprise Team (ESET), a body tasked with overseeing reform in the nation’s power sector, said supplying the plant will LNG will cost about half as much as supplying it with diesel, according to The Jamaica Gleaner.

COPYRIGHT © 2015, INTER-AMERICAN DIALOGUE

for the entire period of the present administration, seems to be important for the size of the Uruguayan economy, but most of it depends on the investment decisions of a government with a high fiscal imbalance and that is reluctant to increase taxation. The fiscal accounts show a deficit of 3.5 percent of GDP, which precludes the possibility of comfortable financing of the program, and it is not clear that the private sector will respond to provide the rest of the financing. Therefore, there are significant doubts about the progress of the investment proposal. The dollar is climbing very fast, and it is likely that it will continue rising, imposing further obstacles to the financing. Besides, the external sector is adverse as Argentina is stagnant with a high probability of recession, which is already present in Brazil’s economic scenario, and the rest of the world is awaiting a change of the monetary policy of the United States in order to receive a signal for capital movements. The realization of the program will face financing problems, and its completion, although necessary, is unlikely.”

EDITORS NOTE: More commentary on this topic appears in Wednesday’s issue of the daily Advisor.

POLITICAL NEWS

Two Venezuelan Opposition Members Freed From Prison A Venezuelan military tribunal late Wednesday freed former Defense Minister Gen. Raúl Baduel, who had broken with then-President PAGE 4

For the week ending August 14, 2015

LATIN AMERICA ENERGY ADVISOR NEWS BRIEFS

S&P Cuts Ecuador’s Credit Rating Citing Oil’s Slide, Political Unrest Ratings agency Standard & Poor’s on Wednesday cut Ecuador’s credit rating one notch, to five levels below investment grade, citing a drop in oil prices and political unrest that have hampered the government’s ability to implement economic policies, Bloomberg News reported. S&P cut the Andean nation’s long-term sovereign rating to B from B+ and said the outlook is stable. The price of oil has fallen and cut government revenue at the same time that government plans to raise taxes and cut spending have faced resistance.

Nearly Complete Results Show Scioli With 38.4% of Vote in Argentina With nearly all the ballots counted from Sunday’s presidential primary in Argentina, ruling party candidate Daniel Scioli on Monday emerged in the strongest position to succeed current President Cristina Fernández de Kirchner, Agence France-Presse reported. With 97.8 percent of ballots counted, the current governor of Buenos Aires province had 38.4 percent of the vote as compared to 30.1 percent for conservative Buenos Aires Mayor Mauricio Macri and 20.6 percent for Sergio Massa, a dissident from Fernández’s party.

Moody’s Cuts Brazil’s Credit Rating to Near Junk Status Ratings agency Moody’s Investors Service on Tuesday downgraded Brazil’s credit rating to near junk status, but said its investment-grade level is safe for now, Reuters reported. Moody’s lowered Brazil’s rating to Baa3, its lowest investment-grade rating, with a stable outlook, saying that despite economic and political challenges, it believes the country will be able to improve its economic and fiscal indicators.

Hugo Chávez in 2007, from prison and placed him on house arrest, the Associated Press reported. Baduel’s release from prison happened just 24 hours after another opposition leader, former San Cristóbal Mayor Daniel Ceballos, was released from prison on medical grounds and also placed on house arrest. Baduel was released after completing six years of an eightyear prison term, his attorney Omar Tosta told the AP. A video clip of Baduel embracing loved ones following his release from a military prison near Caracas was posted to Twitter. Opposition leader Leopoldo López, who was arrested in February 2014, remains jailed at the same military prison. Baduel, who was a confidant of Chávez’s, helped the late leader return to power in 2002 after a brief coup, but he later broke ties with him after he compared a referendum granting Chávez more power to a virtual coup. Baduel was arrested in 2009 on corruption charges that he said had been trumped up

Baduel // File Photo: Agência Brasil.

to punish him for defecting from Chávez’s government. Ceballos after his release went to a relative’s apartment in an upscale part of Caracas and shouted to the press below that he hoped his and Baduel’s releases from prison meant “that all political prisoners might be reunited with their families,” the AP reported. Ceballos was arrested in March 2014 and sentenced to 12 months in prison for failing to stop anti-government protesters from positioning barricades on San Cristóbal’s streets, BBC News reported. San Cristóbal was among the epicenters of large-scale anti-government protests early last year, which left 43 people—both government opponents and supporters—dead. Under house arrest rules, Ceballos is barred from making public statements, participating in political activity and using social media. Another prominent opposition leader, Caracas Mayor Antonio Ledezma, was placed under house arrest in April on charges of supporting

COPYRIGHT © 2015, INTER-AMERICAN DIALOGUE

an alleged plot to overthrow President Nicolás Maduro. Like the other opposition leaders, Ledezma has denied wrongdoing and has said the accusations against him are politically motivated. In April, a group of 26 former world leaders, including Brazil’s Fernando Henrique Cardoso and Mexico’s Felipe Calderón, sent a letter to Venezuela’s government urging the release of jailed opposition leaders.

ECONOMIC NEWS

Mexico’s Central Bank Lowers Growth Estimate for 2015 Mexico’s central bank on Wednesday revised its growth estimate for this year downward to between 1.7 and 2.5 percent from the previous expectation for growth between 2 and 3 percent, The Wall Street Journal reported. The estimate puts pressure on the Bank of Mexico to keep interest rates low, despite a weakening peso, and is also a blow for the government of President Enrique Peña Nieto, who came into office with a 5 percent growth target and promising to implement economic reforms that would boost growth. The midpoint of the estimate—2.1 percent—would mean that the economy expanded at the same rate this year as in 2014. “A low pace of growth is prevailing,” central bank President Agustín Carstens said at the presentation of the quarterly inflation report. Mexico’s economy likely grew just 0.3 percent in the second quarter, the bank said, while growth in May, the most recent month available, was just 0.1 percent compared to April. Industrial production contracted and household consumption recovered a bit from the previous month. The central bank has kept the overnight interest rate at 3 percent in an effort to boost the economy, but a weak peso, which hit an all-time low against the U.S. dollar in July, has prevented further easing. If the U.S. Federal Reserve begins raising interest rates later this year, it is widely expected that Mexico’s central bank will follow suit in an effort to stem the peso’s depreciation and a rise in inflation. PAGE 5

For the week ending August 14, 2015

LATIN AMERICA ENERGY ADVISOR

LATIN AMERICA ENERGY ADVISOR

F E A T U R E D Q & A / Continued from page 3

(currently retailing Pemex gasoline) have an advantage over such companies: they already have installed infrastructure in the country. Currently in Mexico, a successful gas station sells around 25,000 liters of gasoline per day, and the optimum quantity to reach per month is around 500,000 liters. To maintain such success rates and to compete with the big oil companies that will arrive, Mexican companies owning gas stations shall secure the provision of gasoline, either from Pemex or another source, and they shall also modernize their stations. Prior to the reform, consumers of gasoline did not have any choice other than Pemex gas stations, but now they will. Therefore, private gas station owners should provide any possible added value to their users, such as having other related products available, including motor oil, payment services for utilities, restaurants, convenience stores and car washes.”

A

José Ángel García Elizondo, president of the Organización Nacional de Expendedores de Combustibles (Onexpo Nacional, A. C.) in Mexico: “In Mexico, the fuel distribution, transport and sale sector is experiencing the most important and profound transformation and market opening of the last 70 years. This transformation even includes the modernization and expansion of the business model followed at service stations. Pemex is seeking to strengthen and modernize its franchise, while other new players are preparing to enter and compete in the Mexican market. As representatives of gasoline station owners, at Onexpo Nacional, we provide legal and technical advice to members, service station owners in the 32 states of the country. We promote that the rules and general operation standards and the official controls that apply to the fuel

distribution, transport and sale sector follow the principle of a level playing field for all. Onexpo Nacional thus strengthens the unity, transformation and better positioning of the sector, the three principles that currently govern our organization.”

A

Julio César Arteaga, professor of economics at the Universidad Autónoma de Nuevo León: “The market for gas stations has been consolidating for several years. More groups have acquired existing gas stations at the same time as opening new

is published weekly by the Inter-American Dialogue Copyright © 2015 Erik Brand Publisher [email protected] Gene Kuleta Editor [email protected] Megan Cook Reporter, Assistant Editor [email protected]

Michael Shifter, President Peter Hakim, President Emeritus Genaro Arriagada, Nonresident Senior Fellow Sergio Bitar, Nonresident Senior Fellow

Gas stations with a better reputation will gain market share despite more competition.” — Julio César Arteaga

Joan Caivano, Director, Special Projects Maria Darie, Director, Finance & Administration Ariel Fiszbein, Director, Education Program Alejandro Ganimian, Nonresident Fellow Claudio Loser, Senior Fellow Nora Lustig, Nonresident Senior Fellow Margaret Myers, Director, China and Latin America Program Manuel Orozco, Senior Fellow Jeffrey Puryear, Senior Fellow Lisa Viscidi, Director, Energy Program

ones. This started even before the country’s energy reform. With the reform, more groups would like to enter this market. For them to be successful, they will need to offer better services at the pump as well as the complementary markets (convenience stores or car washes, for example). I don’t foresee competition through prices. Another issue in the Mexican market is related to consumers’ perception of getting incomplete liters. Gas stations with a better reputation will gain market share despite more competition.” Editor’s note: The Advisor welcomes comments on its Q&A section. Readers can write editor Gene Kuleta at [email protected].

COPYRIGHT © 2015, INTER-AMERICAN DIALOGUE

Latin America Energy Advisor is published weekly, with the exception of some major U.S. holidays, by the Inter-American Dialogue 1211 Connecticut Avenue NW, Suite 510 Washington, DC 20036 Phone: 202-822-9002 Fax: 202-822-9553 www.thedialogue.org ISSN 2163-7962 Subscription Inquiries are welcomed at [email protected] The opinions expressed by the members of the Board of Advisors and by guest commentators do not necessarily represent those of the publisher. The analysis is the sole view of each commentator and does not necessarily represent the views of their respective employers or firms. The information in this report has been obtained from reliable sources, but neither its accuracy and completeness, nor the opinions based thereon, are guaranteed. If you have any questions relating to the contents of this publication, contact the editorial offices of the Inter-American Dialogue. Contents of this report may not be reproduced, stored in a retrieval system, or transmitted without prior written permission from the publisher.

PAGE 6