British oil giant BP PLC used to have a subsidiary in Venezuela. Now, it has a minority interest in a joint venture with the Venezuelan government of leftist Hugo Chavez. For giving up 51% of its subsidiary, BP received no compensation. It was simply nation-

alized by government fiat. "We hope that our ownership share gives us some influence on policies," notes Robert J. Novaria, director of BP's global treasury services for the Americas. "The economic landscape there is still being created. Some of the other oil companies decided not to play that game and pulled out, but we're still trying to figure out how to manage our situation in Venezuela. It's very discomforting."

Admittedly, that's a worst-case scenario, but experts agree that Latin American countries have given up huge opportunities to benefit from globalization as their politics have moved progressively left. Despite Latin America's proximity to the U.S., countries there–Brazil perhaps being an exception–have fallen off the radar screens of multinational corporations, replaced by Asian powerhouses. "It's hard to estimate the potential loss of investment, but it would be great," notes Eugenio Aleman, senior economist and Latin America specialist at Wells Fargo & Co. "With commodity prices high, Latin America could potentially be cashing in big time, but it isn't happening."

Continue Reading for Free

Register and gain access to:

  • Thought leadership on regulatory changes, economic trends, corporate success stories, and tactical solutions for treasurers, CFOs, risk managers, controllers, and other finance professionals
  • Informative weekly newsletter featuring news, analysis, real-world cas studies, and other critical content
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical coverage of the employee benefits and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.