IISS Cartagena Dialogue 2015

THE INTERNATIONAL INSTITUTE FOR STRATEGIC STUDIES

TRANS-PACIFIC SUMMIT, CARTAGENA, COLOMBIA, 68 MARCH 2015

IISS Cartagena Dialogue

HOST NATION SUPPORT: MINISTRY OF NATIONAL DEFENSE, COLOMBIA

The International Institutefor Strategic StudiesArundel House | 1315 Arundel Street | Temple Place | London | wc2r 3dx | UK

www.iiss.org

April 2015 The International Institute for Strategic Studies

Director-General and Chief Executive Dr John Chipman

Editor Dr Nicholas Redman

Contributors Dr Sanjaya Baru, Virginia Comolli, Nigel Inkster, Antnio Sampaio, Katherine Slowe, Dr Isabel DiVanna Editorial Dr Ayse AbdullahEditorial Research James Howarth, Claire Willman

Production and Design John Buck, Kelly Verity

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without permission in writing from the Institute.

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have, an important military content. The Council and Staff of the Institute are international

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perspectives to the strategic debate.



3Contents

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Chapter 1

Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Chapter 2

Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Chapter 3

Reception . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Chapter 4

Social media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Chapter 5

Press coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61Selected IISS publications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

Contents

4 IISS Cartagena Dialogue

Juan Manuel Santos, President of Colombia

5Foreword

The International Institute for Strategic Studies (IISS) is delighted to release and distribute this summary report of

the proceedings of the new international Dialogue following

in the footsteps of the successful Shangri-La Dialogue

(Singapore) and Manama Dialogue (Bahrain). The inaugural

IISS Cartagena Dialogue: The Trans-Pacific Summit was held

from 68 March in Cartagena, Colombia.

The focus of the summit was the developing relations

between the Latin American states of the Pacific Alliance and

key countries from the Asia-Pacific. The summit had a geo-

economic focus with a strong security and stability compo-nent. The four founding states of the Pacific Alliance Chile,

Colombia, Mexico and Peru have a combined GDP close to

that of Brazil and have growing relations with Asia. A number

of countries in Asia, especially China, Japan, South Korea, and

increasingly others, have economic and political interests in

the Pacific Alliance states.

The IISS Cartagena Dialogue explored the growing links

between the two sides of the Pacific and encouraged the

strengthening of political, diplomatic, economic and commer-cial links.

Foreword

6 IISS Cartagena Dialogue 2015

The summit brought together ministers and CEOs from

Chile, Colombia, Mexico and Peru, with additional partici-pation from Panama, the Inter-American Development Bank

and the IMF together with Brazil, China, Germany, Indonesia,

Japan, Korea, Malaysia, Philippines, Singapore, the UK, and

the United States. Further government and private-sector par-ticipants came from Argentina, Australia, Bahrain, Costa Rica,

Ecuador, France, Honduras, India, the Netherlands, New

Zealand, Russia and Spain, contributing their expertise and

perspectives to the trans-Pacific debate.

The IISS Cartagena Dialogue was a major inter-govern-mental summit with important private-sector and expert

engagement. Total delegate numbers were 363 from 28 coun-tries, allowing for inclusive representation but also sufficient

intimacy to permit easy networking. Ministers conducted

bilateral and multilateral meetings during the summit; oppor-tunities were available for private-sector meetings with gov-ernment representatives, as well as between the various busi-ness leaders in attendance.

The agenda of the IISS Cartagena Dialogue ensured that key themes of common interest were fully covered. Plenary

sessions provided an opportunity for Pacific Alliance gov-ernment leaders to define relations with the Asia-Pacific, and

likewise for Asia-Pacific leaders to outline their approaches to

the Pacific states of Latin America. Perspectives from business

leaders on trans-Pacific relations were also explored, as well as

Asian trade and investment in Latin American commodities.

Special sessions examined two geopolitical and security issues:

Insurgencies, Drugs and Security and Organised Crime and

the Informal Mining Sector. There were also special sessions

on Financial Services Integration: Asian and Pacific Alliance

Experiences and Trans-Pacific Connections: Commodities,

Trade and Investment. Further plenaries addressed a trans-

Pacific agenda for cooperation and experiences from both sides

of the Pacific on conflict resolution and rebuilding societies.

7Foreword

The Pacific Alliance is becoming a significant geo-eco-nomic entity. The free trade and liberal economic outlook

it represents significantly shapes wider debate in Latin

America. The common market it envisages offers inspiring

opportunities for investors and businesses alike. The interest

of the Alliance countries in engaging with the Asia-Pacific is

likely to attract more foreign direct investment from the Asia-

Pacific. North American and European businesses and inves-tors also have an interest in developing close ties with this

evolving formation.

The IISS Cartagena Dialogue was a major event in the 2015

calendar for those interested in Latin American geo-economic

and geopolitical trends. The Institute is committed to estab-lishing the Dialogue as an important multilateral event that

invited coordinated policymaking and engaged businesses in

the region. The IISS was delighted to have worked with the

Government of Colombia and in particular with the Ministry

of Defense, to organise this event. The IISS also warmly thanks

TV Caracol, the Abraaj Group, HSBC, Mitsubishi Corporation

and ICTSI for their enthusiasm and support for this successful

IISS Cartagena Dialogue.Dr John Chipman

Director-General and Chief Executive, IISS


Juan Carlos Varela Rodrguez, President of Panama

9Executive summary


TRANS-PACIFIC SUMMIT, CARTAGENA, COLOMBIA 68 MARCH 2015


CHAPTER 1

Agenda


Mara ngela Holgun Cullar, Minister of Foreign Affairs, Colombia

11Agenda

Friday 6 March 2015ALL DAY Bilateral meetings between government officials

18:0019:00 CARACOL OPENING TELEVISED PANEL LOOKING TOWARDS THE PACIFIC

Chair: Juan Roberto Vargas, News Director, Caracol TV

Juan Carlos Pinzn Bueno, Minister of National Defense, Colombia

Senator Gabriela Cuevas Barron, Chair, Foreign Affairs Committee, Senate of the Republic of Mexico

Dr Chung Min Lee, Ambassador for National Security Affairs, Republic of Korea

Luis Alberto Moreno, President, Inter-American Development Bank

Dr Min Zhu, Deputy Managing Director, International Monetary Fund

19:0020:00 OPENING RECEPTION

20:0022:00 OPENING DINNER AND KEYNOTE ADDRESS THE PACIFIC ALLIANCE AND THE ASIA-PACIFIC: WHAT FUTURE

COOPERATION?

Opening remarks: Dr John Chipman, Director-General and Chief Executive, IISS

Keynote address: Juan Manuel Santos, President of Colombia

Agenda


Saturday 7 March 201508:4509:00 OPENING OF THE SUMMIT

Dr John Chipman, Director-General and Chief Executive, IISS

09:0010:30 FIRST PLENARY SESSION THE PACIFIC ALLIANCE COUNTRIES AND ASIA

Chair: Dr John Chipman, Director-General and Chief Executive, IISS

Mara ngela Holgun Cullar, Minister of Foreign Affairs, Colombia

Jos Antonio Meade Kuribrea, Secretary of Foreign Affairs, Mexico

Claudio de la Puente Ribeyro, Vice Minister of Foreign Affairs, Peru

Edgardo Riveros, Vice Minister of Foreign Affairs, Chile

10:3011:00 BREAK

11:0012:30 SECOND PLENARY SESSION ASIAN PERSPECTIVES ON THE PACIFIC ALLIANCE


Dr Min Zhu, Deputy Managing Director, International Monetary Fund

Cho Taeyul, Vice Minister of Foreign Affairs, Republic of Korea

Cesar Purisima, Secretary of Finance, Philippines

Toshiro Suzuki, Ambassador at Large for International Economic Issues, Japan

12:3014:30 LUNCH

14:3016:00 THIRD PLENARY SESSION THE TRANS-PACIFIC OPPORTUNITY: PERSPECTIVES FROM THE

BUSINESS COMMUNITY

Chair: Bill Emmott, Trustee of the IISS; former Editor, The Economist

Yorihiko Kojima, Chairman of the Board, Mitsubishi Corporation

David Bojanini Garca, Chief Executive Officer, Grupo SURA

Katia Bouazza, Head, Latin America and Capital Financing, HSBC Bank USA

Omar Lodhi, Partner and Regional Head of East Asia, The Abraaj Group

16:0016:30 BREAK

16:3018:00 FOURTH PLENARY SESSION CONFLICT RESOLUTION AND REBUILDING SOCIETIES

Chair: Dr Tim Huxley, Executive Director, IISS-Asia

Gen (Retd) scar Adolfo Naranjo Trujillo, Counsel Minister for Post Conflict, Human Rights and Security, Colombia

13Agenda

Dr Gino Costa, Former Minister of Interior, Peru

Dr Dino Patti Djalal, Former Vice Minister of Foreign Affairs, Indonesia

Senen Bacani, Member, Government Peace Negotiating Panel, Philippines

20:0022:00 GALA DINNER AND SPECIAL ADDRESS REFLECTIONS ON THE TRANS-PACIFIC CHALLENGE

Hosted by: Juan Carlos Pinzn Bueno, Minister of National Defense, Colombia

Sunday 8 March 201509:0011:00 SIMULTANEOUS SPECIAL SESSIONSGROUP I: INSURGENCIES, DRUGS AND INSECURITY

Chair: Virginia Comolli, Research Fellow for Security and Development, IISS

Gustavo Mohar, Founder and Director-General, Grupo Atalaya; former Secretary General, CISEN, Mexico

Javier Ciurlizza, Program Director, Latin America and the Caribbean, International Crisis Group

Tom Kramer, Researcher, Drugs and Democracy Programme, Transnational Institute

Sarah MacIntosh, Director-General for Defence and Intelligence, Foreign and Commonwealth Office, UK

GROUP II: SPECIAL SESSION II: TRANS-PACIFIC CONNECTIONS: COMMODITIES, TRADE AND INVESTMENT

Chair: Dr Nicholas Redman, Director of Editorial; Senior Fellow for Geopolitical Risk and Economic Security, IISS

Jorge Merino, Former Minister of Mines and Energy, Peru

Dr Octavio Pastrana, Member of the Board, Pemex

Jos Juan Ruiz Gmez, Chief Economist, Inter-American Development Bank

Dr Brendon Hammer, First Assistant Secretary, Americas Division, Department of Foreign Affairs and Trade, Australia

GROUP III: ORGANISED CRIME AND THE INFORMAL MINING SECTOR

Chair: Nigel Inkster, Director of Transnational Threats and Political Risk, IISS

Hernn de Solminihac, Former Minister of Mining, Chile

Csar Ipenza Peralta, Professor of Environmental Impact, ESAN Graduate School of Business

Lisa Viscidi, Director, Energy, Climate Change and Extractive Industries Program, Inter-American Dialogue


Wangkai Lang, Managing Director, Mining MMD China (remarks delivered by Dr Wenguang Shao, Consulting Senior Fellow for China and International Affairs, IISS)

GROUP IV: FINANCIAL SERVICES INTEGRATION: ASIAN AND PACIFIC ALLIANCE EXPERIENCES

Chair: Dr Sanjaya Baru, Director of Geo-Economics and Strategy, IISS-Middle East

Dr Felipe Larran Bascun, Senior Adviser to the IISS; former Minister of Finance, Chile

Dr Luis Miguel Castilla, Ambassador of Peru to the US; former Minister of Economy and Finance, Peru

Dr Naoyuki Yoshino, Dean, Asian Development Bank Institute

Dr Wonho Kim, Professor, Hankuk University of Foreign Studies; President, Latin American Studies Association of Korea

11:0011:30 BREAK

11:3013:00 FIFTH PLENARY SESSION AN AGENDA FOR TRANS-PACIFIC COOPERATION


Mauricio Crdenas Santamara, Minister of Finance and Public Credit, Colombia

Dr Marty Natalegawa, Former Minister of Foreign Affairs, Indonesia

Celso Amorim, Former Minister of External Affairs; former Minister of Defence, Brazil

Lee Ark Boon, Deputy Secretary (Trade), Ministry of Trade and Industry, Singapore

13:0013:15 STAGING BREAK

13:1514:00 CONCLUDING KEYNOTE ADDRESS THE TRANS-PACIFIC FUTURE


14:0015:30 FAREWELL LUNCH

15Executive summary




CHAPTER 2

Executive summary

17Executive summary

President Juan Manuel Santos opened the IISS Cartagena

Dialogue: The Trans-Pacific Summit on 6 March 2015 with a

keynote address. He described the integration of Colombia

with the Asia-Pacific as a dream, almost an obsession

during the past two decades. The Dialogue which brought

together the four Pacific Alliance states of Colombia, Chile,

Mexico and Peru, plus observer states from Latin America and

Asia represented a further step in Colombias trans-Pacific

relationships, Santos said. The countrys GDP growth has

averaged 5% annually in recent years, surpassing neighbouring

countries. It attracts today more foreign investment than ever,

thanks to the control of inflation and the reduction of poverty.

Approximately two million people have been lifted out of

poverty in the past four years, the president said, adding that

the goal is to eradicate poverty entirely within a decade.

President Santos told delegates that the peace process

with the FARC paved the way for more social and economic

progress. It held out the promise of ending the oldest conflict

in the western hemisphere, which had run for 50 years. He

spoke candidly about the difficulties of striking a balance

between peace and justice for victims in the talks with FARC

Executive summary


being held in Havana, Cuba. Colombias goal, he said, is to

achieve a level of justice that allows peace. On a positive note,

he shared with the audience the experience of victims of the

conflict who journeyed to Havana and returned home more

willing to forgive than before. Colombia entered the talks from a position of strength

and increased security that was a result of the strengthening of the armed forces and the police, President Santos said.

The security forces were able to achieve significant victories

that debilitated FARC during the years prior to the Havana

talks. Improved security has also been one of the pillars of

Colombias economic and social progress, he added. These

advances have been supported by integration with the global

economy: Colombia now has preferential access to 1.5 billion

consumers in the Americas, Europe and soon the Asia-

Pacific. The Pacific Alliance, he said, is such a promising trade

initiative because it seeks deep integration between the four

current member countries. The Alliance, he added, is the most

dynamic platform for economy and trade in Latin America,

pursuing the free circulation of goods, services, capital and

people.

Juan Manuel Santos, President of Colombia

Click to see video

19Executive summary

The president highlighted the deepening integration of the

Pacific Alliance countries into Asian political and economic

fora such as ASEAN and APEC. One of the challenges for

Colombia is to diversify the range of its exports to Asia-Pacific

countries. Santos said Colombia will exploit its agricultural

potential to sell more food products to Asian countries,

where populations and incomes are rising, stoking increased

demand for food products. The IISS Cartagena Dialogue, the

president concluded, reaffirms Colombias role as a point of

contact between Asia and Latin America.

Shortly before President Santos gave the keynote address,

Caracol Television organised a debate involving delegates and speakers at the Dialogue, chaired by News Director Juan

Roberto Vargas and broadcast to 27 Latin American countries.

He began by asking panellists to assess the importance of

the relationship between Latin America and Asia. Juan Carlos

Pinzn Bueno, Minister of National Defense of Colombia,

described Asia as a benchmark for the world economy and

a centre of technological development; he noted that Latin

America was smaller but that the Pacific Alliance nevertheless

constituted a market of comparable size to Brazil or India, and

Dr John Chipman, Director-General and Chief Executive, IISS

Click to see video


thus was an attractive partner for Asia. Dr Chung Min Lee,

Koreas Ambassador for National Security Affairs, agreed with

that assessment, predicting that the Pacific Alliance would

become a growth driver and core region within the Americas.

Luis Alberto Moreno Mejia, president of the Inter-American

Development Bank, noted the increased trade flows: Asias

share in Latin American trade rose from 8% in 2000 to almost

25% in 2014, although the distribution varied widely with

Mexico and Brazil dominating. A southsouth dialogue could

help Latin America close the gap with Asia on technology and

education, he said, but also help Asia handle the transitions

associated with urbanisation a process that Latin America has

largely completed. Dr Min Zhu, deputy director general of the

IMF, also noted the rapid increase in trade flows and said that

Latin America was already integrated in some Asian vertically

integrated supply chains. The closeness of the economies was

apparent in the high degree of correlation between Asian and

Latin American stockmarkets, he added.

Senator Gabriela Cuevas Barron, chair of the Mexican

Senates Foreign Affairs Committee, noted the lack of pan-

Pacific institutions to stimulate contacts between Latin

(lr) Juan Carlos Pinzn Bueno, Minister of National Defense, Colombia; Dr Chung Min Lee, Ambassador for National Security Affairs, Republic of Korea; Luis Alberto Moreno Mejia, President, Inter-American Development Bank; Dr Min Zhu, Deputy Managing Director, IMF; Senator Gabriela Cuevas Barron, Chair of the Mexican Senates Foreign Affairs Committee

Click to see video

21Executive summary

America and Asia, aside from the Trans-Pacific Partnership

(TPP) trade initiative. The Pacific Alliance, she added, has

great potential as a market and an exporter of some important

commodities such as silver and copper.

Mr Vargas then turned attention to the question of

insecurity and how that affected business decisions. Senator

Cuevas observed that, according to the UN, seven of the worlds ten most dangerous countries are located in Latin

America, and yet this had not proven to be a barrier to

investment. Insecurity, even in the worst-afflicted states,

was not uniform, she noted. Chung Min Lee suggested that

perceptions of Asian investors sometimes failed to keep pace

with improving realities in Colombia and Mexico, while also

noting that Asia suffered from inter-state tensions that were

largely absent in Latin America.

Minister Pinzn added that it was important to boost

security in order for investors to feel comfortable noting

that economic development was vital to underpin the security

gains made in Colombia in recent years. Touching on Dr Lees

comparison of security in Asia and Latin America, he said that

the latter enjoyed considerable security at the inter-state level

but low levels of security at the personal level.

Plenary 1: The Pacific Alliance Countries and AsiaOpening the first plenary session, Mara ngela Holgun Cullar, Minister of Foreign Affairs, Colombia, outlined the importance of the Pacific Alliance in supporting Colombias

development and integration in Asia. Colombias partners

share our vision, she said, but they have already built links to

Asia through trade agreements and we have benefited from

their experience and the ability to share diplomatic missions.

The Pacific Alliance is focused on Asia because it believes

the region is the lynchpin of the global economy in the 21st

century, the minister remarked.

Within Latin America, the agenda for cooperation within

the alliance includes migration, easing travel between the


regions. Already these nations are reaping the benefits of

easier freedom of movement, the minister remarked, and are

continuing to work together despite changes of government

in member-countries. In Asia, the Pacific Alliance has started a

relationship with ASEAN a grouping that, like the alliance,

is a good example of open regionalism and ensuring stability

and prosperity.

Jos Antonio Meade Kuribrena, Secretary of Foreign Affairs, Mexico, reflected on the failure of Latin America

until recently to make a success of regional integration,

despite commonalities of language, culture, values, history

and aspirations. The Pacific Alliance, he suggested, marks

a change for the better. It has been assisted by having two

main objectives: to build a single, deeply integrated economic

space; and to create a platform to promote the countries in the

wider world and especially in Asia. A great deal of progress

has been made on the first objective over the last three years,

not only regarding trade but also visa and stockmarket

integration, he said.Secretary Meade said that the next step is to promote the

Pacific Alliance countries in the Pacific region and to create

(lr) Mara ngela Holgun Cullar, Minister of Foreign Affairs, Colombia; Jos Antonio Meade Kuribrena, Secretary of Foreign Affairs, Mexico

Click to see video Click to see video

23Executive summary

opportunities for business-to-business contacts. To that end,

they hope to hold an APEC-Pacific Alliance meeting on the

margins of the Latin American Economic Forum in April.

The theme of the Pacific Alliance being a response to

previous failed integration efforts was taken up by Claudio de la Puente Ribeyro, Vice Minister of Foreign Affairs,

Peru. Broader integration projects have been stymied by ideological and developmental differences among states,

he said, prompting Perus then-president Alen Garcia to

establish a vanguard for integration based on a core group

of solid democracies with similar outlooks on economic

and trade policy. The Pacific Alliance is the first integration

venture based on common interests rather than geographical

proximity, the vice minister said. It is open to other states

in the region, so long as they share the alliances values and

standards. Looking to Asia, the vice minister vowed to help and

support Colombias desire to join APEC. There is considerable

Asian interest in the Pacific Alliance, he added, noting that

there are 32 observer states, half of which are Asian. Speaking

of Perus own ties to Asia, he recalled that diplomatic relations

(lr) Claudio de la Puente Ribeyro, Vice Minister of Foreign Affairs, Peru; Edgardo Riveros, Vice Minister of Foreign Affairs, Chile



with China and Japan were established in the 1870s and that

today the country is home to the largest Chinese community

in Latin America and the second-largest Japanese community.

Today China is Perus leading trade partner and a major

investor too.Addressing another aspect of the Pacific Alliance,

Edgardo Riveros, Vice Minister of Foreign Affairs, Chile, observed that the world is now comprised of trade groupings,

making integration a necessity in order to create efficient

development and foreign-trade policies. The individual states

of the Pacific Alliance have forged many bilateral Free-Trade

Agreements (FTAs), he said, but acting individually is no

longer sufficient. The Pacific Alliance stands out because of

its desire to become a genuine regional platform. He affirmed

Chiles commitment to far-reaching trade liberalisation and

opening the trade in services and government procurement

within the Alliance.The Pacific Alliances Asian focus can help with important

domestic objectives, in particular the cause of reducing

inequality within Latin America, the vice minister said.

Asian expertise and experience in science, technology and

First Plenary Session

Click to see video

25Executive summary

innovation can help to narrow disparities of income and

opportunity within the Pacific Alliance states.

The debate that followed the speeches touched on

the question of whether the Pacific Alliances Asian focus

represented an effort to reduce economic reliance on China,

and also on the difficulty of balancing close security ties with

the US and growing trade ties with China a dilemma that is

common to some Asian and Latin American states. Dr Felipe

Larran Bascun, Chiles former Minister of Finance and

Senior Adviser to the IISS, raised the question of the Alliance widening or deepening, and whether that necessitated

institutional development. The two foreign ministers were

emphatic in their response. Secretary Meade said the Pacific

Alliances limited bureaucracy and institutionalism has

been hugely advantageous. Minister Holgun warned that the creation of a bureaucracy could deprive the alliance

of dynamism and creativity. It is essential to not create a

bureaucratic machine, she added.

Plenary 2: Asian Perspectives on the Pacific AllianceDr Min Zhu, Deputy Managing Director of the International Monetary Fund, observed that Latin Americas exports to Asia had risen substantially. Moreover, China and Japan

were providing significant capital flows to Latin America and

equity markets had become closely aligned. Asian economies

were now moving from export-led policies towards the

development of domestic economies, the expansion of the

middle class and a strong financial sector. Chinas current

spending on investment, at 44% of GDP, is unsustainable: a

cut to 34% of GDP over several years would have significant

adverse impacts on Latin American commodity markets. The

challenge is to establish a new normal in relations between

Asia and Latin America, moving beyond the commodity

cycle towards a more broad-based relationship involving

increased consumerism, services and agriculture. This should

involve not just the major corporations but also small and


medium-sized enterprises (SMEs). Such an evolution would

have profound social and cultural implications. It would be

characterised by greater levels of technology transfer and increased investment in infrastructure and education, which

would bring substantial benefits including reductions in

income inequality.

Cho Taeyul, Vice Minister of Foreign Affairs, Republic

of Korea, emphasised the importance for South Korea of the Pacific Alliance. Already Seoul is negotiating bilateral

Free-Trade Agreements (FTAs) with the four Alliance states.

Although Korea has a long-standing relationship of trust with

Colombia, dating back to the Korean War, Seoul feels a sense

of camaraderie with all four Pacific Alliance states based on

a shared outlook. Latin America has been a laboratory for

competing theories of economic development, he said, but it

now appears that the open, free-trade model espoused by the

Pacific Alliance is carrying the day. Latin America as a whole

faces a shortfall in infrastructure: the cost of remedying it is

expected to rise to US$120 billion by 2020, the vice minister

stated. South Korean companies are well placed to work in

this sphere, creating high-quality jobs and added value.

(lr) Cho Taeyul, Vice Minister of Foreign Affairs, Republic of Korea; Dr Min Zhu, Deputy Managing Director of the International Monetary Fund .


27Executive summary

Cesar Purisima, Secretary of Finance, Philippines, observed that the trans-Pacific alliance was not a new idea.

Some 450 years ago there had been a galleon trade between

Acapulco and Manila involving bullion on one side and

Chinese manufactured goods on the other. At that time, and

for most of recorded history, China had been the worlds

largest economy and it was now resuming that status. Asia

as a whole would soon account for two-thirds of the worlds

middle class, he stated. Re-establishing the galleon trade will

require clarity of vision. The Pacific Alliance, for instance,

should be clear about its role within Latin America. If it is

to be a hub for inter-American trade, it requires increased

connectivity and the negotiation of gold-standard FTAs ideally

involving the abolition of tariffs, since the transportation costs

of trans-Pacific trade already constitute a significant tariff.

Secretary Purisima added that the Pacific Alliance should

serve as a channel for information, to overcome the cultural

and linguistic barriers hampering trans-Pacific trade.

Ambassador Toshiro Suzuki of Japan said that his country would shortly have FTAs with all Pacific Alliance

nations once its negotiations with Colombia were concluded.

(lr) Cesar Purisima, Secretary of Finance, Philippines; Toshiro Suzuki, Ambassador at Large for International Economic Issues, Japan



The keidanren has set up a Pacific Alliance task force, and

in 2014 Prime Minister Shinzo Abe brought 250 Japanese

businessmen on his visits to Colombia, Mexico and Chile. To

fulfil its potential, he said, the Pacific Alliance has to overcome

several challenges including diversifying its production base

and increasing its manufacturing capacity. Japan is investing

heavily in Latin America and its involvement in Mexicos

automotive industry included the local sourcing of parts. The

Pacific Alliance should also integrate its value chain into the

global supply chain, improve infrastructure and logistics,

harmonise regulations and provide greater support for its

SMEs. Finally, the Alliance should raise productivity through

investments in education, training and technology. Japan was

ready to play a greater role in assisting in all these areas, the

ambassador concluded.

Questions and comments to speakers included an

emphasis on the need for the Pacific Alliance project to move

from a negotiated elite project to one that was more organic

and commanded broad popular support. It should move

beyond a focus on FTAs and address security and climate

change. Greater engagement with SMEs in the Pacific Alliance

Second Plenary Session

Click to see video

29Executive summary

was also needed, as currently they view greater engagement

with Asia as a source of unwelcome competition rather than

an opportunity. There was also discussion of the political

implications of greater trans-Pacific trade including the need

for states to maintain a balance in their relations with the USA

and with China.

Plenary 3: The Trans-Pacific Opportunity: Perspectives from the Business CommunityThis session was chaired by Bill Emmott, former editor, The Economist and an IISS Trustee. In his opening remarks Emmott emphasised the significance of the IISS inviting business leaders

to speak at the Cartagena Dialogue. Relationships between

nations are mediated not just by governments but also through

people-to-people and business-to-business interactions, he said.

Business plays an important role in the interaction between the

Pacific Alliance countries and the countries of the Asia-Pacific,

with growing trade and investment relations.

Speaking first, Yorihiko Kojima, Chairman of the Board, Mitsubishi Corporation, focused on three issues, namely, the importance of free trade to economic development

in the Asia-Pacific region, in the context of the growing

economic integration through Global Value Chains (GVC);

the expectations of Japanese business from the Pacific Alliance

countries and the relations between Japan and the Pacific

Alliance countries. He viewed the Trans-Pacific Partnership

(TPP) trade initiative as an attempt to address the needs of

multinational companies with trans-border investments

through GVCs. With an aggregate income of US$2 trillion

the Pacific Alliance economies were together as big as Italys

and, therefore, offered an attractive market opportunity for

Japanese companies. However, Mr Kojima felt, for trans-

Pacific trade to flourish it is necessary that there is political

stability and security in the Asia-Pacific region. Japan seeks

a stable, secure and peaceful Pacific region. Mr Kojima

commended the Japan-Colombia Economic Partnership


Agreement (EPA) and viewed it as a good framework for

increasing trade and investment flows. He believed this

would encourage Japanese firms to invest in the region and

also set up joint ventures with Latin American firms in third

markets, especially Southeast Asia.

The second speaker, Omar Lodhi, Partner and Regional Head of East Asia, The Abraaj Group, drew attention to the growing significance of south-south trade and capital

flows and viewed the Pacific Alliance as an initiative that

would strengthen such flows. He identified three drivers of

change in Asia-Latin America relations: demographic change

in both regions; urbanisation; and the rise of a new middle

class. While Asian investment in the Latin American region

was still very low, he saw this rising, especially with the new

regulatory convergence in the region owing to regional blocs such as the Pacific Alliance. In fact the Pacific Alliance had

progressed further than ASEAN as far as financial integration

and regulatory convergence was concerned.The third speaker, Katia Bouazza, Head, Latin America

and Capital Financing, HSBC Bank USA, emphasised the relevance of the globalisation and integration of financial

(lr) Yorihiko Kojima, Chairman of the Board, Mitsubishi Corporation; Omar Lodhi, Partner and Regional Head of East Asia, The Abraaj Group


31Executive summary

markets for policy makers, especially in emerging markets,

in dealing with the challenges posed by cross border flows

of capital. She said global banks like HSBC have opened up

investment opportunities in Latin America to international

investors and have also been active in taking Latin American

investors to attractive investment destinations. Any investor

seeks four pre-conditions for taking a cross-border investment

decision. Firstly, trade liberalisation and the free flow of

goods and services. Secondly, transparent dispute settlement

mechanisms. Thirdly, an initial level of protection to facilitate

growth of business. Fourthly, policy transparency and

stability. No one likes uncertainty, she emphasised.

The last speaker, David Bojanini Garca, Chief Executive Officer, Grupo SURA, listed the strengths of the Pacific

Alliance economies and emphasised the relevance of financial

services integration within the region for domestic and

overseas investors. While the integration of regional stock

markets was an important step forward in this regard, he

sought further liberalisation of policy with regard to pension

funds and outlined the potential benefits. Policymakers should

promote the benefits of regional integration within the Pacific

(lr) Katia Bouazza, Head, Latin America and Capital Financing, HSBC Bank USA; David Bojanini Garca, Chief Executive Officer, Suramericana Investment Group; Bill Emmott, Trustee of the IISS; former Editor, The Economist

Click to see video Click to see video Click to see video


Alliance to businesses, he insisted, as many business leaders

were unaware of the opportunities offered by Pacific Alliance

economic integration. He saw the assertion of the rule of

law and the freedom of markets and democratic governance

as important attributes of the Pacific Alliance that would

reassure investors. He believed events like the IISS Cartagena

Dialogue would play an important role in increasing local and

global awareness regarding the Pacific Alliance.

In the discussion that followed participants underscored

the fact that the economic integration of the region had been

made possible by each of the governments pursuing sensible

economic policies. However, they emphasised the need

for greater regulatory convergence. In his intervention, Dr Felippe Larrain Bascunan, former finance minister of Chile,

underscored the importance of economic growth, policy

transparency and stability and democracy and the rule of law

to the success of the Pacific Alliance economies.

Plenary 4: Conflict Resolution and Rebuilding SocietiesThe session dwelt on the respective experiences of Asia and

Latin America in ending long-running internal conflicts

Third Plenary Session

Click to see video

33Executive summary

and then underpinning post-conflict stability. Gen (Retd) scar Adolfo Naranjo Trujillo, Counsel Minister for Post-Conflict Human Rights and Security, Colombia, began by announcing an agreement at the peace talks in Havana on

conflict de-escalation measures that will allow for demining

work immediately. The Havana talks, he said, are not the

result of a military stalemate; rather, they are the result of 15

years of strengthening the military, police and justice system.

The decision to negotiate rather than seek outright military

victory was ethical, the general said. It is important to show

that politics can work for all Colombians, so there is no need

to take up arms.

Gen Naranjo recalled that the authorities studied 37

negotiation models before embarking on its peace initiative,

to avoid repeating past failures. Planning for the post-conflict

phase is already underway, he said, because this is vital to

securing peace. In Havana, fundamental agreements have

been reached on rural and agricultural issues. Progress has

been made on political participation and the controversial

topic of narcotics. The government insists that FARC

acknowledges its reliance on the drug trade and explicitly

renounce it, otherwise narcotics could become a threat to

post-conflict stabilisation.

Dr Dino Patti Djalal, former Vice Minister for Foreign Affairs, Indonesia, recounted the steps that ended the three-

decade long conflict in Aceh that resulted in tens of thousands

of deaths. The Free Aceh Movement (Geraken Aceh Merdeka,

or GAM) was a formidable military force but the 2004 tsunami

changed the conflict dynamic entirely, he said, killing 200,000

people and causing so much devastation that GAM was

prompted to negotiate. Peace talks were completed in six

months. The key to this success lay in five attributes: leadership,

pragmatism, a forward-looking mindset, reconciliation and

patience. President Yudhoyonos leadership and his insistence

that a military solution would not provide a sustainable end to

the conflict was vital; he changed societys perception of what


constituted victory. Once negotiations began, pragmatism

and flexibility were essential to making progress. Thus the

Indonesian government agreed to demilitarisation of territory

and the deployment of international observers. Equally

important was the agreement of both sides to face the future

rather than dwelling on past violations of human rights. All

these steps enabled reconciliation, by which enemies became

political partners, he concluded.

In contrast with the rapid resolution in Aceh, the conflict

involving the Moro Islamic Liberation Front (MILF) in

the Philippines took 17 years of protracted negotiations.

Senen Bacani, Member, Government of Philippines Peace Negotiating Panel, spoke about a process that is still potentially vulnerable. A confidence-building programme

has been put into effect and in 2014 the government and

MILF launched the Bangsamoro Development Plan to help sustainable peace and development. Decomissioning is

vital, Mr Bacani said. He identified four essential elements

for success in resolving conflicts: leadership, trust, historical

justice and supportive consensus. Whereas the points

regarding leadership and trust were largely in line with

(lr) Dr Dino Patti Djalal, former Vice Minister for Foreign Affairs, Indonesia; Senen Bacani, Member, Government of Philippines Peace Negotiating Panel


35Executive summary

those offered earlier by Mr Djalal, Mr Bacani argued that a

commitment to look honestly at past crimes, to right wrongs

and make recompense, was vital for peace. It was also vital,

he insisted, to have a national consensus in support of conflict

resolution.Returning to the Latin American context, Dr Gino

Costa, former Minister of the Interior, Peru, argued that El Salvadors experience of ending an internal conflict was more

relevant for Colombia than Perus. In El Salvador there was no

ready military solution to the conflict, he said. The negotiation

centred on how the guerrillas could be brought into the political mainstream and what price the state would pay to

achieve their demobilisation. Politics has triumphed: two of

the six presidents since the peace was made have been from

the ranks of former guerrillas. However, the post-conflict

period has been very violent, with high levels of crime,

perhaps due to the failure to secure economic development.

Colombias explicit focus on planning for post-conflict

stabilisation was wise in the context of El Salvadors troubles,

Dr Costa said. However he cautioned that the drug trade made

the FARC conflict more difficult to solve while the Statute of

(lr) Dr Gino Costa, former Minister of the Interior, Peru; Gen (Retd) Oscar Adolfo Naranjo Trujillo, Counsel Minister for Post-Conflict Human Rights and Security, Colombia; Dr Tim Huxley, Executive Director, IISS-Asia

Click to see video Click to see video Click to see video


Rome and the existence of the International Criminal Court

made a political pact less easy to construct.

The following debate touched on demobilisation

questions, societal attitudes and the tension between populism

and statecraft when addressing conflict resolution. Lieutenant

General (Retd) Syed Ata Hasnain, Senior Fellow, Delhi Policy

Group praised the prudence of the Indonesian government in

redefining its concept of victory. Too often national ego gets

in the way of peace, he said.

Gala Dinner and Special Address: Reflections on the Trans-Pacific ChallengeSpeaking at the Gala Dinner, Colombian Defence Minister Juan Carlos Pinzn Bueno highlighted Colombias counter-insurgency success during the past 15 years. The country was

able to strengthen the public security forces thanks to a special

tax aimed at expanding its capabilities and to Plan Colombia, the

aid package promoted by the US. Thanks to these efforts, he said,

approximately 90% of municipalities are now free of conflict.

The security forces in Colombia have developed capacities

for complex operations and had been able to move from

Fourth Plenary Session

Click to see video

37Executive summary

defensive to offensive operations that pushed the guerrillas

to remote regions of the country. Minister Pinzn added that

security strategies such as Sword of Honour and Green Heart

were built on the capacity of the forces to adapt according

to the shifting dynamics of armed groups. The countrys

security forces are now skilled in planning and coordinating

joint operations involving multiple agencies.

Building a long-term sense of security, Minister Pinzn

added, will take several years. The signing of a peace treaty

would be just the first step toward peace and the public forces

will be charged with maintaining the security environment

in order to achieve social and economic prosperity. He also

highlighted the armed forces involvement in the technical

talks with FARC to pave the way for the end of the conflict,

despite their 50-year-long struggle against the guerrilla

group.

Minister Pinzn expounded on the concept of

comprehensive security (seguridad integral) the combination of law enforcement and military tools with other state

institutions and services. He argued that the armed forces

are tasked with providing the basic security guarantees for


Click to see video


the state, but these need to be followed by strong institutions alongside education, health and job opportunities.

This comprehensive approach is needed, he said, to tackle

the shifting security dynamics in Colombia. Hybrid threats

operating through diffuse networks will continue to pose

challenges and require the attention of the armed forces. Hybrid

groups, the minister added, are driven both by political and

economic aims and benefit from technological innovations,

global capital flows and migration. He highlighted terrorism,

cyber attacks and transnational criminal groups engaged in

the exploitation of natural resources, such as illegal mining

and illegal fishing, as key security challenges ahead. These

complex threats underscore the important role that the armed

forces have to play in the future, as guarantors of peace,

development and prosperity.

The Colombian armed forces and police have adapted to

these transnational and diffuse networks of armed groups

through a process of modernisation, said Pinzn. Its public

forces are now in a position to share their experiences with

other countries. A total of 24,000 members of the military or

police agencies from 70 countries have undertaken training

with Colombian security practitioners. This experience and

the growing links with the AsiaPacific, he said, reinforce the

role of Colombia as a key regional and global actor.

Simultaneous Special Session I: Insurgencies, Drugs and InsecurityThe overarching theme was that both Asia and Latin America

are struggling to deal with the insurgents that rely on the drug trade and other forms of criminality, and have in some

cases become full-time criminals. Across Latin America,

organised crime groups are highly adaptable and resilient.

They have diversified their business activities, which include

drug production and smuggling but also extortion, illegal

mining, contraband, counterfeiting and human- and arms-

trafficking. Cartels are now vertically integrated in all these

39Executive summary

criminal activities which, a few years ago, they controlled

only tangentially. There is a relationship between the organisational level of

crime, and security. The fragmentation of cartels in Mexico,

as a result of government policies, has produced a more

disorganised criminal structure that is in flux and features

high levels of violence. Elsewhere, violence is increasingly

used for coercive reasons and the pattern of attacks has

become more selective.

Colombias conflict with the FARC is unique because it

is the only ideological conflict that predates the end of the

Cold War but continues today. Assuming that the peace

process reaches a successful conclusion, it will have regional

implications. One of the negative likely outcomes is that it will

intensify the level of criminal activity.

The slide of insurgency towards criminality is a global

phenomenon. In Myanmar, there is evidence of close links

between insurgents and organised crime. The country is

believed to be the second-largest opium producer in the

world; illegal mining and logging are also evident. Some

armed groups in the north of the country even operate

their own drug-control policies. Although ethnic Chinese

groups are deeply involved in Myanmars drug-trafficking,

(lr) Sarah MacIntosh, Director-General for Defence and Intelligence, Foreign and Commonwealth Office, UK; Javier Ciurlizza, Program Director, Latin America and the Caribbean, International Crisis Group

Click to see photos Click to see photos


it would be a mistake to blame certain ethnic groups while

ignoring the reality that crime-enabled corruption reaches

high into the state apparatus. Until recently, the government

has focused on arresting addicts and low-level traffickers

but now it is considering a development-led approach that

will involve local communities and address the issue of land

rights, which goes to the heart of discontent, instability and criminality.

Some European states recognise the nexus between

insurgency and organised crime, as well as the transnational

nature of the threat. The UK, for instance, is providing

strategic assistance to partners to improve the socio-economic

environment, strengthen governance and institutions, build

criminal justice systems and disrupt crime. Yet there is also

a responsibility in Western societies to work on demand

reduction.

Special Session II: Trans-Pacific Connections: Commodities, Trade and Investment Trade has been the foundation of increased commercial

ties between Latin America and Asia in recent years, but

the cyclical downturn in commodity prices has revealed

a structural problem: Latin America is overdependent on

(lr) Gustavo Mohar, Founder and Director-General, Grupo Atalaya; former Secretary General, CISEN, Mexico; Tom Kramer, Researcher, Drugs and Democracy Programme, Transnational Institute; Virginia Comolli, Research Fellow for Security and Development, IISS

Click to see photosClick to see photos Click to see photos

41Executive summary

commodity exports to Asia. The discussion addressed two

principal themes: the importance of investing in mineral

exploration to ensure sufficient capacity in the next decade;

and the challenges of achieving diversification, through a

broader range of exports and the attraction of more foreign,

especially Asian, investment.

In Mexico, the government has embarked on an ambitious

reform of the oil sector with the aim of attracting the resources

necessary to increase output by 1m-2m barrels per day. This

has involved constitutional reform and political controversy,

in order to establish a new environment characterised by

sectoral liberalisation, protection for investment and higher

levels of transparency. In Peru, meanwhile, the authorities have

cut taxes in response to falling copper prices and are seeking

to attract still-higher levels of foreign investment in order to

address an expected 2m tonnes per year shortfall in supply to

the global market by the end of this decade. Companies from

China, Japan and Korea are all heavily involved. Chile, Peru

and Mexico together could account for 40% of global copper

output. In Peru and Mexico there is a challenge for investors

to ensure that new projects are undertaken in a way that

ensures the support of local communities. Partnership and

development are key to success.

(lr) Dr Octavio Pastrana, Member of the Board, Pemex; Jorge Merino, Former Minister of Mines and Energy, Peru



Diversification of exports from Latin America to Asia

will depend partly on how ready Latin American states

are to receive investment; currently, not all are. There is

potentially an investment bonanza at hand: up to half of

inward investment to Latin America could be of Asian origin

within the next five years, and some investment could flow

in the other direction too. Here the Pacific Alliance states

seem particularly well-placed, because of their commitment

to free markets, open competition and a rules-based system.

Investment will contribute to easing three structural

impediments on Latin American economies: informality and

low productivity; inadequate infrastructure; and income

inequality.

With the right preconditions in place, Latin America will

be able to diversify its export of goods and services to Asia,

and in particular to take advantage of the expected growth

in Asias middle class. This offers considerable opportunities

for services, in particular tourism. For instance, the number

of Chinese tourists going abroad each year is expected to

double to 200m by 2020 and their appetites will become

more sophisticated. Another growth area is agriculture, as

improving security in Latin America makes it possible to

cultivate undeveloped land; this could help to feed a growing

(lr) Dr Brendon Hammer, First Assistant Secretary, Americas Division, Department of Foreign Affairs and Trade, Australia; Jos Juan Ruiz Gmez, Chief Economist, Inter-American Development Bank; Dr Nicholas Redman, Director of Editorial; Senior Fellow for Geopolitical Risk and Economic Security, IISS

Click to see photos Click to see photos Click to see photos

43Executive summary

Asia while also lifting large numbers of Latin Americans out

of poverty and unemployment. The further development of

the Pacific Alliance economies will not only boost trade with

Asia, but also raise trade among members. Today, only 10% of

the Pacific Alliances trade is within the bloc but the alliances

recognition that trade is important for development should

have a positive influence across the continent.

Special Session III: Organised Crime and the Informal Mining Sector The session examined the links between criminal groups

and informal miners, an issue of growing concern for the

mineral-producing countries of the Pacific Alliance. The

boom in commodity prices during the 2000s boosted formal

economies but also encouraged non-state armed groups, both

guerrillas and organised criminals, to deepen their operations

in mineral-rich areas. Participants highlighted how attractive

the activity has become for inhabitants of rural areas, since

mining is now usually more profitable than agriculture.

In some parts of Colombia and Peru, armed groups are

now more likely to engage in informal mining than drug

trafficking, encouraged by state weakness. In Colombia,

over 80% of mineral extraction is unlicensed. Illegal actors

are able to conceal their involvement by tapping into trading

companies, which then mix the illegally-extracted minerals

with the legal supplies.

China is not only the main buyer of minerals from the

Pacific Alliance, but also has its own domestic problems with

informality. Efforts to tackle the problem started in earnest in

1997. By then, approximately half of Chinas coal output was

informal. The activity prospered thanks in part to corrupt local

officials, especially in regions where coal mining represented

a big portion of the economy. Criminal gangs have also

had involvement with the activity. But thanks to new laws,

regulations and a campaign by the national government,

several informal mines have been closed. The government


has offered training for small farmers and set a nation-wide

inspections programme on coal safety, enforcing technical

standards, safety measures and promoting best practices.

Many international policies regarding informal mining

were discussed. Efforts by West African countries to apply

common regulations and tracking systems could serve as

examples for the Pacific Alliance, as long as these are carefully

adapted to local realities. On that front, speakers highlighted

that there still is little exchange of ideas and best practices

between member countries of the alliance.

Some incentives for small miners to seek entry into the

legal mining sector have been successful. Some Latin American

countries, for instance, have established official institutions to

help small miners to become legal and increase productivity

while complying with environmental regulations. The

guarantee of a minimum price for small miners was cited as a

particularly successful incentive because it protects producers

from variations in international commodity markets.

As Asia-Pacific countries are significant consumers of

mineral supplies, the session analysed the scope for greater

trans-Pacific cooperation. It was proposed that countries on

both sides of the Pacific increase information exchange to

ensure that minerals sent to Asia are from legal producers.

(lr) Csar Ipenza Peralta, Professor of Environmental Impact, ESAN Graduate School of Business; Hernn de Solminihac, former Minister of Mining, Chile


45Executive summary

At present, the monitoring of the supply chain is conducted

occasionally by importers (mostly in Asia), on their own

initiative. The exchange of information between law

enforcement authorities and the establishment of a trans-

Pacific system to monitor mineral supplies could help reduce

informality and weaken organised crime.

Special Session IV: Financial Services Integration: Asian and Pacific Alliance ExperiencesSpeakers in this session considered four main opportunities:

the acceleration of growth in the four economies of Pacific

Alliance states compared to other South American players;

the size of the Pacific Alliance market as a major incentive in

attracting capital; the appetite to diversify investment streams;

and the aim to harmonise the taxation of capital flows and

currency exchanges.

While there was agreement on matters of incentivising

investment by reducing tariffs and taxes on transactions, there

was controversy about sources of investment in the Pacific

Alliance countries. This discrepancy was based on what

each speaker perceived to be the immediate needs and best

ways to deliver the economic and social goals of the Pacific

Alliance. Infrastructure was one topic of contention, with

(lr) Lisa Viscidi, Director, Energy, Climate Change and Extractive Industries Program, Inter-American Dialogue; Dr Wenguang Shao, Consulting Senior Fellow for China and International Affairs, IISS; Nigel Inkster, Director of Transnational Threats and Political Risk, IISS



some in the panel maintaining that it is critical to invest in

infrastructure to ensure that the states in the Pacific Alliance

can thrive long-term, while others referred to the need to

balance risk in portfolios, infrastructure being on the risky

side of investment. Pension funds were brought up as a major

element in the integration agenda, so the matter of whether

or not infrastructure should be a large part of portfolios was

heatedly debated.In discussing diversification of income streams and

business alliances, speakers concurred that in both regions

SMEs are critical, far more than in Europe and the US.

Integration there, they claimed, needs to revolve around

ensuring that lending mechanisms become far more robust.

The relative absence of suitable capital markets, especially

for new enterprises, and the perceived lack of support from

the state to small businesses, suggests that creative Asian

models can be shared across the two regions. For example,

the panel discussed how Hometown Investment Trust Funds

can go a long way to provide financing to SMEs, having

been successfully exported as a model from Japan to Peru,

Cambodia and Vietnam.

The panel made clear that creating the mechanisms to inject

capital is only part of the solution. The session also addressed

(lr) Dr Felipe Larran Bascun, former Minister of Finance, Chile, and Senior Adviser to the IISS; Dr Naoyuki Yoshino, Dean, Asian Development Bank Institute


47Executive summary

the importance of harmonising taxation, as well as matters

of currency and liquidity. The Chiang Mai Initiative was

raised as a particularly successful model of currency reserve

fund. Its success is attributable to the fact that participant

countries have a high level of trust and knowledge of each

others macroeconomic features. Members of the Pacific

Alliance, moving towards financial integration, will need to

consider that unlike trade integration, financial integration is

about sharing risks and promoting transparency in ways that

enhance their relationship as well as an understanding of the

upside and downside of currency collaboration.

The session also yielded a consensus on Mercado

Integrado Latinoamericano (MILA), namely that efforts are

not as yet sufficient to ensure financial integration, and that

structural issues will be best addressed in coordinated micro-

reforms which, in turn, will help deliver a broader Pacific

Alliance framework.

Plenary 5: An Agenda for Trans-Pacific CooperationOpening the session, Mauricio Crdenas Santamara, Minister of Finance and Public Credit, Colombia, noted that his countrys strong economic performance of recent years

was based on achieving a level of trust among consumers,

(lr) Dr Wonho Kim, Professor, Hankuk University of Foreign Studies; President, Latin American Studies Association of Korea; Dr Luis Miguel Castilla, Ambassador of Peru to the US; former Minister of Economy and Finance, Peru; Dr Sanjaya Baru, Director of Geo-Economics and Strategy, IISS-Middle East



business and foreign investors. The minister noted that the

Pacific Alliance was conceived at a time of high commodity

prices, but now that the supercycle has passed the true value

of alliance has become apparent, as it offers increased markets

for the non-commodity sectors.

In addition, the Pacific Alliance helps Colombia and its

partners internationally, he said, noting the support that

Mexico and Chile had offered his country in joining the OECD.

The focus on Asia also underscores the connections between peace, development and global integration for Colombia. The

countrys peace process will enable the state to establish its

presence in territory where currently it is weak, he said. That

in turn will open rich territories for agricultural production,

and Asia will be the principal market for this output, creating

prosperity that will sustain peace.

Surveying trans-Pacific exchanges, Dr Marty Natalegawa, former Minister of Foreign Affairs, Indonesia, noted the expansion of ASEANs initiatives to build the security

architecture in the western Pacific in recent years, as well

as multilateral initiatives such as the East Asia Summit and

ASEAN Regional Forum. He also touched upon APEC, TPP

(lr) Dr Marty Natalegawa, former Minister of Foreign Affairs, Indonesia; Lee Ark Boon, Deputy Secretary (Trade), Ministry of Trade and Industry, Singapore


49Executive summary

and the Forum for East Asia-Latin America Cooperation

(FEALAC) as institutions that serve as a bridging function to

Latin America.

Dr Natalegawa offered a two-point agenda for cooperation,

focused firstly on physical, institutional and people-to-

people connectivity, and secondly on promoting a peaceful

Pacific Ocean. It is important to not let sensitivities get in the

way of addressing this important subject and confronting

reality, he said. In building a new security architecture for the new century, he pointed to three objectives: improving

strategic trust, managing territorial disputes peacefully and

accommodating the rise of new powers.

Celso Amorim, Brazils former Minister of Foreign Affairs and former Minister of Defence, took up the theme

of peace and security by suggesting that the Pacific could

draw lessons from the South Atlantic by establishing a zone

of peace and cooperation. Central to this success, he said,

was the effort to separate the South Atlantic from the broader

ocean in a political sense. The former minister reminded

delegates that Mercosur was larger than the Pacific Alliance

and currently enjoyed higher levels of intra-bloc trade; that

(lr) Celso Amorim, Brazils former Minister of Foreign Affairs; Mauricio Crdenas Santamara, Minister of Finance and Public Credit, Colombia



organisation and UNASUR, moreover, are overtly political

projects designed to establish a zone of peace in which war

is inconceivable. By contrast, he noted, the Pacific Alliance

has no defence aspiration. Mr Amorim said Brazil is trying

to create a Defence Council of South America that would

stimulate high-technology industry across the continent and

ensure that more of the military equipment procured in Latin

America would be produced there.

Returning to the theme of trans-Pacific cooperation, Lee Ark Boon, Singapores Deputy Secretary (Trade), Ministry of Trade and Industry spoke about the importance of boosting connectivity between governments, business and

people. He argued for a strong regulatory infrastructure that

went beyond FTAs, also embracing investment protection and

double-taxation agreements.

Trade negotiations are often difficult because of the

internal dynamics in the participant states, he said, but insisted

that it was beneficial to tackle trade and investment barriers,

because the benefits are felt broadly. This refers in particular

to SMEs, that otherwise lack the resources to do business

across the Pacific Ocean. The deputy secretary concluded

Fifth Plenary Session

Click to see video

51Executive summary

with a bold proposal: to think strategically by concluding an

FTA between the Pacific Alliance and ASEAN, rather than

focusing on bilateral FTAs. A region-to-region FTA could

have huge benefits under rules of origin, he said, and would

allow companies in ASEAN and the Pacific Alliance to access

global value chains. It could also be a stepping stone towards

an Asia-Pacific FTA, he added.

The ensuing discussion touched on the possibility that the

Pacific Alliance could one day become a body embracing all

of Latin America, as the European Union which started as

the European Coal and Steel Community in 1951 has done

in Europe. There was also discussion around whether there

could be functional integration between the Alliance on one hand and Mercosur and other regional bodies on the other.

Minister Crdenas stressed that the Pacific Alliance is open to

all states who share the alliances outlook and values, but it

was essential that they adhere to the standards already agreed and implemented. Celso Amorim argued that Mercosur had

much better prospects of becoming the EU of Latin America

than Mercosur; he also warned that it was important to avoid

dividing Latin America between a pro-business, free-trading

Pacific and a statist South Atlantic. This would put peace in

jeopardy, he warned.

Concluding Keynote Address: Juan Carlos Varela Rodrguez, President of PanamaPresident Juan Carlos Varela Rodrguez of Panama delivered

the closing keynote address at the IISS Cartagena Dialogue.

His inspiring speech focused on three intertwined themes:

good governance, regional and international cooperation, and

prosperity.

The president urged fellow world leaders and civil

servants not to look at politics as a business but as a way

of serving society and addressing issues affecting citizens.

Strengthening democracy is, he argued, as crucial as dealing

with the challenge of organised crime currently affecting


many countries in Latin America. State resources must be used

to improve life, he said. Leaders ought to lead by example and

prove that the state is capable of caring for its people and the

youth in particular. In this way, it would be possible to break

the foundation of criminal groups.

These considerations should be at the core of interactions between the region and Asian countries, the president

insisted. Priority should be given to human development and

continued efforts to eliminate inequality and unemployment,

and to ensure universal access to basic services and education. This will consolidate and unify society, while also bolstering peace and making the environment less attractive to

transnational criminal networks. In this context, he lauded the

Colombian peace process as a model worthy of emulation.

Turning to the Pacific Alliance, President Varela noted

that Panama is in the process of accession. He promised

cooperation with other regional powers on all fronts and cited

the many initiatives undertaken to contribute to national and

regional prosperity. Panama is expected to see GDP growth of

6-7% annually from 2016, fired by government investments,

and is positioning itself as a passenger and cargo hub.


Click to see video

53Executive summary

Initiatives include the expansion of the Panama Canal, the

expansion of the international airport, and the development

of the South Caribbean cruise route.Increasingly, the president noted, Asian countries and

companies are investing and operating in Panama. China,

the second largest user of the Panama Canal, has invested

in construction. Singapore sponsored the building of a

technical school. South Korean technology can be found in local hospitals and the country has invested in energy and

mining. Japan is to finance and provide technical support to

improvement works in the Panama City bay.

These forms of cooperation no doubt foster prosperity but

ought to be accompanied by information exchanges such as

in the context of migration and border control, and by joint

efforts to ensue that the international financial system is not

exploited for criminal or terrorist purposes, the president said.

He concluded his address by stressing the need to build trust among nations to foster cooperation against transnational

challenges such as organised crime, natural disasters and

pandemics. In this respect, the IISS Cartagena Dialogue

was a welcome mechanism to promote the creation and

strengthening of bilateral and international ties, he averred.




CHAPTER 3

Reception

57Reception




CHAPTER 4

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CHAPTER 5

Press coverage;Selected IISS publications

63Press coverage

Caracol Radio6 March 2015

Santos instalar en Cartagena cumbre IISS Dialogue de lderes mundiales

Juan Manuel Santos

Con una cena privada el presidente Juan

Manuel Santos y el director del Instituto

Internacional de Estudios Estratgicos

(IISS por sus siglas en ingls), John

Chipman, instalarn este 6 de marzo

en Cartagena la tercera cumbre de

este organismo, denominada Dilogo

Cartagena, cumbre trans-pacfica.

Al evento asisten ms de 40 lderes

del mundo y tambin el presidente de

Panam, Juan Carlos Varela.

Ejecutivos de prestigiosas empre-

sas y ministros como la canciller Mara

ngela Holgun, elministro de hacienda

Mauricio Crdenas y de defensa Juan

Carlos Pinzn, compartirn experien-cias con los asistentes sobre dilogos in-tergubernamentales y el crecimiento de

las relaciones Asia - Latinoamrica.

La cumbre se cumplir hasta el

domingo 8 de marzo, y tamben habr

un espacio para hablar sobre la resolu-cin de conflictos, en la que delegados

de Indonesia y Filipinas comparti-rn sus experiencias. En dicho panel,

tambin participar el jefe negociador

del gobierno en La Habana, Humerto

De La Calle. As mismo, se buscar

el fortalecimiento de la Alianza del

Pacfico con el comercio asitico.

2015 Caracol RadioReprinted with permission

Press coverage


El Universal6 March 2015

Poltica y comercio transpacfico, eje central del Dilogo de CartagenaAcadmicos, polticos y empresarios

de todo el mundo se renen desde hoy

en la ciudad para asistir al Dilogo de

Cartagena, un evento en el que se discu-tirn temas relacionados con la defensa,

seguridad y economa.

El Dilogo de Cartagena, que se

realiza en el hotel Hilton hasta el prximo 8 de marzo, es una iniciativa

del Instituto Internacional de Estudios

Estratgicos, IISS (por sus siglas en

ingls), en la que diversos pases refuer-zan sus relaciones en temas econmicos

y de seguridad.En el Dilogo de Cartagena, al que

asistirn delegaciones de 30 pases de los

cinco continentes, tomarn parte lderes

polticos, empresarios y altos funcio-narios de pases como Corea, Japn,

Filipinas, Indonesia, China, Panam,

Chile, Per y Colombia, entre otros.

El evento tendr como eje central

las relaciones entre los pases aliados

del AsiaPacfico y le dar un especial

nfasis a los enlaces crecientes entre los

dos lados de este ocano, fomentando el

fortalecimiento de redes polticas, diplo-mticas, econmicas, comerciales y los

acuerdos entre naciones sobre defensa y seguridad.

El Dilogo de Cartagena estar

encabezado por el presidente Juan

Manuel Santos, quien ser acompaa-do por los ministro de Defensa, Juan

Carlos Pinzn, de Hacienda, Mauricio

Crdenas Santamara, la ministra de

Comercio, Industria y Turismo, Cecilia

lvarez-Correa y la canciller, Mara

ngela Holgun.

2015 El UniversalReprinted with permission

US Department of State Official Blog6 March 2015

The US and the Pacific Alliance: Partners for Prosperity

David Thorne

Secretary Kerry entrusted me with the

mission of promoting a vision of eco-nomic diplomacy: a Shared Prosperity

Agenda. The premise of the agenda is

that security, stability, and prosperity

are inexorably intertwined. You cant

have prosperity without stability and

security, and there is no sustainable sta-bility without prosperity. A cooperative

and constructive regional arrangement

like the Pacific Alliance is an effective

way to advance peace and stability

and prosperity for all.

It is with this mission in mind that

I am in the historic port of Cartagena,

Colombia through March 8th for a con-ference sponsored by the prestigious

Institute for International Strategic Studies (IISS) regarding the Pacific

Alliance trade bloc, and the poten-

65Press coverage

tial for further economic integration

between Latin America and the Asia-

Pacific.

Formed in 2011, the Pacific Alliance

is composed of four of our southern

neighbors: Mexico, Colombia, Peru, and

Chile. The four countries possess a com-bined population of over 214 million,

38 percent of Latin Americas GDP, 50

percent of the regions exports, and 36

percent of foreign direct investment.

They also possess a geographic position

along the Pacific Rim and as global eco-nomic activity has shifted toward Asia,

the advantages of their location have become obvious.

The four alliance countries are cur-rently consolidating an ambitious

agenda, including signing a plurilateral

free trade agreement, eliminating visa

requirements, instituting educational

exchange and scholarship programs,

and integrating capital markets. The ex-istence of a group of countries in Latin

America dedicated to free trade and

a liberal approach to markets is inter-esting and will help the debate in the

region as a whole.The United States is one of thirty-

four countries with observer status to

the Pacific Alliance. The Alliance has ex-pressed interest in cooperation with ob-servers and the United States responded

has proposed cooperation in trade fa-cilitation, travel facilitation, small busi-ness, entrepreneurship and exchanges

between research institutions. Last month I visited Fort Worth,

Texas, to make closing remarks at the

US governments first official engage-ment with the Pacific Alliance. Under

the U.S. government-sponsored La Idea

program, entrepreneurs from all four

countries participated in two weeks of

engagement with U.S. investors at three

business incubators, one of which was in Fort Worth. I enjoyed mixing with the

attendees, several of whom told me that

they were already making deals with

U.S. companies they had met through

the program. They also told me that

in Fort Worth they had made excel-lent contacts among the other Pacific

Alliance participants from other coun-tries where they had not known anyone

before. In small ways like this we not

only build contacts for our own busi-ness people, but we encourage construc-tive ventures like the Pacific Alliance to

increase cooperation.

This weekends Cartagena Conf-

erence includes keynote remarks from

Colombian President Santos and min-ister-level representation from all four

Pacific Alliance countries. The event

includes a mix of government officials

from the Pacific Alliance and some of its

thirty-four observer countries business representatives, and non-governmental

trade and investment analysts.

I hope that the La Idea incuba-tor program and my participation

in the IISS Cartagena Dialogue are just the first of many efforts by the

United States to generate active prac-tical cooperation between the United

States and this dynamic regional bloc.

Congratulations to the Pacific Alliance

on their progress and best wishes as

they work to further integrate trade

and positive engagement between Asia

and the Americas.


2015 US Department of State Official

BlogReprinted with permission

AFP7 March 2015

Santos inaugura en Colombia dilogo entre pases del PacficoEl presidente colombiano Juan Manuel

Santos inaugur este viernes en la

ciudad caribea de Cartagena (norte) un

dilogo entre los pases de la cuenca del

Pacfico, en el que se tocarn temas de

seguridad, comercio y cooperacin.

El llamado Dilogo de Cartagena,

que rene a decenas de lderes, empre-sarios y estrategas de casi 30 pases del

rea del Pacfico, se desarrollar hasta

el prximo domingo en esta ciudad del

Caribe colombiano.

Este dilogo est llamado a tener

una gran importancia para la integra-cin y la cooperacin entre las dos

orillas del mayor cuerpo de agua del

mundo, el ocano Pacfico, dijo Santos

en su discurso de apertura este viernes

por la noche.

La agenda de trabajo de esta cumbre

pasa por temas estratgicos como la se-guridad y la defensa, pero incluye otros

temas muy importantes como el comer-cio, la cooperacin y el bienestar social,

aadi el presidente colombiano.

El encuentro es organizado por el

Instituto Internacional para Estudios

Estratgicos (International Institute for

Strategic Studies, IISS) y el ministerio de

Defensa de Colombia.

Segn Santos, Colombia fue escogi-da como sede de esta cumbre estratgica

por sus avances en el proceso de paz con

la guerrilla de las FARC, que se desarro-lla desde 2012 en Cuba para poner fin a

un conflicto armado de ms de medio

siglo, por su buen desarrollo econmico

y por los avances que ha registrado la

Alianza del Pacfico.

El presidente colombiano ha sido

un impulsor del bloque regional de la

Alianza del Pacfico, integrado tambin

por Chile, Mxico y Per, y el cual tiene

como principal misin aumentar el in-tercambio comercial con la regin Asia-

Pacfico.

Queremos crecer juntos y progresar

juntos, queremos forjar una humani-dad en paz (...) sabemos que unidos los

pases del Asia-Pacfico con los pases de

Amrica-Pacfico tenemos la posibilidad

de hacer la diferencia, aadi Santos.

El sb

Documents

IISS Cartagena Dialogue 2015