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DID II SAY THAT? - Small Wonder The Treasury Extends A Hand To Latin American Businesses

Latin America, which has rightfully complained of being ignored by the U.S.under the administration of President George W. Bush, is finally getting some attention, and some spare change, from an unexpected source — theTreasury.

Latin America, which has rightfully complained of being ignored by the U.S.under the administration of President George W. Bush, is finally getting some attention, and some spare change, from an unexpected source — theTreasury. In June, Treasury Secretary Henry Paulson Jr.launched a $200 million initiative to expand U.S. and local bank lending to small businesses, the work horses of Latin American economies, churning out most of the production and employment in the growing region. The program offers $150 million in loan guarantees to large U.S. commercial banks and midsize regional banks as well as large regional banks in Latin America, helping them get on board forloans averaging $20,000.“We’re sharing portfolio risk, which gives banks confidence they can give these loans,” Robert Mos-bacher Jr., president of the Washington-based Overseas Private Investment Corp., tells II. (OPIC will cover up to 75 percent of credit risk.) The Treasury plans to spend another $50 million on programs meant to break down the bureaucratic barriers in the business environment, for example, teaching banks lending techniques for small businesses and promoting the easing of business license and loan collateral requirements. By selecting the Treasury to head up the modest initiative, the U.S. administration signaled that Paulson, who remains untainted in the region,is the designated point manfor mending the U.S.’s tattered image among its neighbors. “He is considered by the administration to be a primary emissary to the region,” says Donald Terry, manager of the Inter-American Development Bank’s Multilateral Investment Fund, which will runthe training for banks.The launch of the schemealso underscores Bush’s interest in bolstering the private sector in the region, because it allows a few public bucks toleverage vast private funds for small business. A similar Treasury program begun in 2000 in Eastern Europe offered $40 million in U.S. grants, and launched 1.3 million small-business loans, averaging $6,600, for a total portfolio valued at nearly $9 billion, according to OP IC’sMosbacher. Expectations of the small effort, then, run high: “This could light a fire in a region that needs to ratchet up its level of economic activity,” says Mosbacher. It may also help put outsome fires in a region where a growing number of leaders are turning their backs on free markets.

WHAT WE SAID ABOUT PUTIN

APRIL 2000:One month before Vladimir Putin became presi-dent of the Russian Federation, Contributing Editor Craig Mellowwrote about the changes the ex–KGBofficer would bring toMoscow. “Most Kremlin analysts expect Putin to clash with theoligarchs — and soon,” Mellow quite accurately told readers.The story listed promising signs, noting that “few insiders believe [Putin] will wipe out 15 years of democratic freedoms. And he shows no nostalgia for Communisteconomics.” The overall message was that the decisive and forceful leader would pursue gradualreform. But there was a caveat: “Even if Putin succeeds in sidelining the oligarchs politically, somewonder whether he knows what to do next.” In his reporting, Mellow spoke to several bullish investors, including William Browder, head of Moscow-based Hermitage Capital Management, who said: “Yeltsin let the animals get out of the cages and start running the zoo in Russia. I think Putin’s going to put them back in, and that’s good for business.” Browder, who later became acritic of Russian corporate governance, notably targeting a couple of state-owned companies,was unexpectedly barred from Russia in November 2005. He now runs his firm from London.