Friday, 15 June 2018

Summer Message – Football World Cup 2018 – “Party Like a Russian” for Much Needed 'Global Glasnost'

The previous weblog regards Corruption in Brazil - pertaining to the same causes, symptoms and cures as elsewhere in the world – was posted for three weeks to ensure the strength of a very important message.

No sociological system, from neighbourhoods to entire countries to unified econo-political blocs can survive if the everyday actions of its member-stakeholders seek self-serving, short-termist exploitation over the values behind basic decency.

The paradoxical distant history of Russia - one divergent between the archetypical hardy, hard-drinking, village peasant and the 'Arcadia' created by the Czars in their Fabergé Egg, bubble-like world - is thankfully little more than a bad memory. And the dire authoritarian personal restrictions of the supposed antidote...Communism..even with its positives of mass high-culture, a now long failed ideology; as is possibly being re-played again today with the landmark talks between the USA's President Trump and N.Korea's leader Jong-Un Kim.

Russia, like the other BRICs, experienced the creation of new economic opportunities, much assisted by sector and trade liberalisation, FDI, and even the re-routing of enormous locked state-owned funds to generate a new era. One that saw the emergence of a new middle class as soon as a decade after Gorbachev's Glasnost and the Perestroika restructuring programmes began in the mid 1980s. Much assisted by Reagan's then still relevant previous silver-screen persona as meld of the honest pioneer and frontier-lands sheriff – so setting the perception of 'responsible capitalism' - the Iron-Curtain became dismantled and a new world was born for millions.

It was not easy, especially for the older generations given the disappearance of the previous engrained certainty, but a new entrepreneurial spirit emerged that lawfully replaced and so contracted much of the previous 'black-marketeering' that had existed as part of everyone's life, from food to tractor parts, though never acknowledged.

As also well documented, the transition was not easy, as those in immediate positions of administrative power were inevitably approached by those with money and/or threats, to ensure much from enormous national commodities operations down to local licensing rights were gained by those who wanted things to go their way to themselves exploit the new opportunities for commercial gain.

President Putin is today revered by his people, precisely because although inevitably connected to such 'business-people' through his rise through the ranks, his origins were very humble, an upbringing which demands responsibility at an early age, which together with the study of Law so requiring critical thinking, and service with the KGB in foreign intelligence before entering politics. Essentially a background which made him very serious and essentially conservative. This mirrors his mass electorate; as seen by the mass applaud for the repulsion of the deliberately provocative 'liberal invasion' of the 'Pussy Riot' episode disregarding the sanctity of the Church.

To those outside Russia in the West, the mass of the agricultural, industrial and services employed middle-class and the balance of their lifestyles as progressive traditionalists, is seemingly an anathema; even though that stance be the norm for all EM middle-classes, and so arguably today the 'new global norm'.

That Russian 'New Wealth' amongst the Oligarchs and their 'clans' (family and business), was inevitably strategically spread around the world, and given the size of that wealth running to millions and billions of Dollars, it went into property assets (so altering the character of upscale locales), new foreign businesses and luxury trinkets.

So, it is no surprise that the average European and American who has either personally seen, but more likely watched on Lifestyle TV - view “Russians” and their accompanying status symbols as either unwanted nouveau-riche cultural interlopers (ie the old residents of Knightsbridge), or paradoxically far lower down the socio-economic ladder, as the new arbiters of luxury (ie the media-fed, high-lifestyle influenced youth).

Robbie Williams was the star performer at the opening ceremony of Russia 2018 World Cup, and for good reason – he juxtaposed that schism in his own vocal and visual 'artwork'.

His song and video of 'Party Like a Russian' summed-up both the oppositional antipathy and aspirational envy of those who view the Expat 'Russians', whether from a corner table in Quaglino's (of St James's) or from a day-trip to Harrods from the suburbs or provinces.

In that song video Williams mimics, mocks and praises this actually rare, but seemingly archetypal, 'New Russian'. He illustrates the ego-driven mentality that uses agenda-centric ploys and tricks for the gain of 'big money', together with the assistance of well-dressed 'heavies' for the ultimate influence of physical intimidation.

Essentially, a “don't give a f**k” attitude about anyone else to obtain their aims, which will in turn again feed the ego through the belief of others' admiration.

All the while, seeking to both enter the sphere of high-society whilst also deliberately illustrating their greater wealth. The perplexing element being the cultural recognition that true high-society does not treat anyone of any standing with disrespect. The innate paradox is the re-moulding of an ego and attitude created upon the effective diminishment of others to have one's own way, to the need to be thoughtful and considerate to those supposedly 'beneath you'.

This was the brilliant sub-text of the 'Party Like a Russian' video - in which Robbie is besuited in bling, whilst surrounded by his all female entourage of balletic maids, and allusion to the marrying-game of as 'this seasons'  debutentes offer themselves as prospective new wives.

It was filmed in the stairwells, library and Great Hall of Hatfield House, Hertfordshire; the seat of the Marquis of Salisbury, and early home of Elizabeth I; where a portrait of the Queen shows “eyes and ears” on her dress, illustrating a spy-network that operated in a panoptican and all-knowing manner – much like any form of institutionalised power; and of course akin to the methods of the old KGB.

And almost as if life follows art in a subtly orchestrated pattern, the Russian World Cup opens at the same time that Prince of Wales and Duchess of Cornwall visit the town of Salisbury, where the Russian nerve agent attack took place.

Given the tensions between the UK and Russia over the last 5 years or so, ultimately which way international relations go, is yet to be seen,  but as the USA puts itself first within the context of international trade, the 2018 World Cup offers the opportunity for the UK to operate as true global diplomat, a role it will obviously require as BREXIT (in what ever form) is pursued.

But for now, for the remainder of the majority outside the 1%, whose lives are far beyond the all-consuming concerns of gaining or losing portions of enormous wealth as the economic and political tides sway, beyond the need for cultural balancing acts to climb the slippery pole, and beyond the intrigue of spy-networks that inevitably comes with the 1% territory, the 'common' global citizen, whether young, old, male, female or even a football fan or not, can enjoy the atmosphere and original intent of international ideology that the TV cameras and commentators of the 2018 World Cup will themselves project around the world.

And the very fact that President Putin saw the innate humour in having Robbie perform, given the mocking tone of his video about oligarch Russians, illustrates that even though Putin is officially required to convey power and impressive status, his head and heart are amongst the common people.

And lastly, just to inform of an 'in-joke', the reason Robbie gave a seemingly offensive - but actually cheekily-meant 'single finger' during the performance - was to echo the end of the video itself, an intended parody of a parody, a meta-physical circular in-joke...or to quote Churchill... a humouristic “riddle, wrapped in a mystery, inside an enigma”.

It seems that Vladimir and Robbie enjoyed the joke.

Sunday, 20 May 2018

Macro-Level Trends - Brazil - Latin America WEF 2018 : Corruption

Since the inception of modern western capitalism in 16th century Italy (the roots of modern banking) and 17th century Netherlands (the formation of the modern company), Capitalist, Socialist and Communist economic structures have been prone to a myriad of schema by individuals and groups.

From the counterfeiting and 'shaving' of coins to the creation of deliberately deceitful commercial “projections”, through to the use of dirty money laundering through apparently legitimate businesses, through overtly 'creative' accounting methods, the creation of deceptive financial instruments and of course the nasty use of sociological and psychological ploys within public and private realms.

Latin America has long been cited by the West as an epicentre of financial and economic corruption, whilst all too conveniently officialdom either unable to effectively combat the sophistication of white-collar crime, or deficient in the public punishment of those (comparitively already with much) who view commerce not as a socially shared wealth-generator, but as a game for their own economic ends.

Given the maturity and complexity of the financial structures of Wall Street, the City, Paris, Frankfurt, Milan etc, from previous 'off balance sheet' instruments to the growth of 'dark pool' (barely transparent) exchanges, the goings-on in America and Europe in reality no doubt make Latin America appear tame and naïve in comparison.

This recognised, it cannot be denied that Latin America has long been identified with the big names of official corruption and criminality. From long before Batista's military-political stranglehold over a very economically divided Cuba, to the astounding career criminality of Colombia's 'drug lord' Escobar; mixing dirty money with infrastructure development programmes for the apparent social good; afflicting the lives of those across the globe whilst seen by some as a local hero.
Unfortunately, as perhaps the diametric opposite to all too rare cultures such as Old Scandinavia (wherein there was a singular group struggle to survive the environment and so form strong common bonds and common well-being), LatAm's combination of mostly good climate allowing easier basic survival, its cultural 'mish-mash' (Indigenous, European and African) and historic social stratas meant that (like the coastal Mediterranean basin) the socio-economic ties of trade were generally loose, permissive, easily broken and so open to abuse.

[NB Previous mention was made of the Portugese (very Separdic influenced) here today gone tomorrow 'trader' mindset, and its antithesis to Northern Europe's Teutonic values].

Thus the greater social 'fluidity' of LatAm and Brazil, and a near historically entrenched experiences of 'famine and feast' has formed the popular mentality, from those the bottom to those at the top.

It is then no surprise to see long-route truck-drivers off-loading part of their haul through the black-market (foodstuffs to oils to construction materials) or feigning accidents for insurance scams, and blaming the losses of on “bad roads”. Or the all too historically common story of populist leaders (themselves from the common heartland) apparently “gone bad”.

The same old stories which though need to be addressed, seem inexorable.

More worrying have been the recent corporate and political scandals wrapped in 'Lavo Jato', with money laundering through currency dealing, bribery regards the awarding of construction contracts, and the politicised control of the state oil company including asset over-valuation in its accounts and bribery payments.

Most shocking though, the near certain (not so) 'accidental death' of the Supreme Court Judge handling the case in small plane crash.

Parallels to the Italian mafia have obviously been made in the Brazilian press, and if the authorities do not continue to take a very hard line in this and other matters, the enormous potential of Brazil as seen through the 2000s and 2010s could be lost for decades.

Hence the question of Corruption has never been so prosaic as at present, at the beginnings of Brazil's new growth era.


The WEF discussion panel comprised of:

Jose Vera – President of HNC News and Chair
Dela Rubio - President of Transparency International (NGO)
Paola Beliz - President Microsoft Brazil
Torqauto Jardim - President of the Ministry of Justice Brazil
Denize Dresser – Political Analyst, Technical Institute of Mexico

Unfortunately Carmen Lucia a senior judge and President from Brazil's Supreme Court was unable to attend the panel.

[As previous, investment-auto-motives' comments appear within the square parenthesis]

Chair -
Corruption is a chronic disease that stops the development of our country. The corruption index by Transparency International includes many LatAm countries asbeing the worst in the world. From worst to better, Venezuela, Haiti and Nicaragua, Guatamala, Dominican Republic, Paraguay, Mexico, Hondures, Equador, El Slavador, Bolivia, Peru, Panama.

Only Uraguay, Chile and Argentina have been better ranked, on par with the likes of Spain and Portugal. Four LatAm Presidents are presently in jail, others awaiting extradition to the USA, on parole or being investigated (with details given).

The question is “what can be done to break the cycle of corruption and promote social stability?”

Delia Rubio -

I do believe we can move forward, firstly breaking with the cycle of impunity, through judges and prosecutors, and other agencies (CC in Guatamala, MaC in Honduras).

The first key point is to ensure this trend (of justice seeking) will become sustainable and 'institutional', promotion of the rule of law, and independence of judiciary and public prosecutors.

The second path is the prevention of corruption, we have access to information through collaboration in technology so that it becomes more accessible. With a partnership between corporate, civil society and governments.

As per prevention, 2 specific areas:
1. private sector individuals gaining public office standing so blurring interests (conflict)
2. the private sector funding of politics (eg the Oderbrecht story illustrating the door to corruption)
This represents the procurement of favours and commitments.

Critical has been social mobilisation on the streets, highlighting the public anger. We have to channel that social mobility, and create more practical channels for participation. Technology of course will help with social networks, but we need to create a consensus. If as now, the climate is that 'this is how private sector commerce does business' we will never end corruption. We have to review what society deems as acceptable and unacceptable, essentially the values of society.

We have to work long-term upon eduction and examples, because it means changing the culture.

[This is all good and well, but it is long echoed rhetoric].

Paola Beliz -
Corruption is having an enormous impact in LatAm, and requires and enormous impact through technology. We at Microsoft aim to to do more with technology, to rebuild trust and the basics of democracy. Central is the idea of control, but this may only increase bureaucracy, so technology needs to ensure transparency, and offer better services to citizens.

There are 4 ways :

- law of access to information since 2005: needs to become more open to public
- digital identification : traceability of citizens to fight fraud via blockchain technologies.
- public tenders : emergence of AI to create 'intelligent tenders' via algorithems
- partnering against corruption initiative : highlighting gov't actions, campaign finance etc

[This over-simplifies the challenges of developing and executing blockchain and other algorithmic technologies. The tech sector is publicising the revolutionary capabilities of such systems, but the journey from the likes of Bitcoin and Bitcoin Mining to broadscale public service solutions is not necessarily unidirectional or simple. Better to make basic systems work properly providing 'access for all' (including those without their own personal devices) than to focus possibly haphazardly upon next generation and beyond systems]

Chair Vera -
Besides the issues of culture and social mobilisation, we have data about blockchain technology that demonstrated that we are still in the very early stages of what could be enormously useful. (ie inferring that such systems are still very premature for all the media hype).

Another question is how to control activities in every field”.

[This obviously raises the issue of societal power structures, something hardly touched upon by any body since the rise of what might be decsribed as an increasingly 'panoptican society'].

Denize Dresser -
I come from a country on that list of most corrupt countries, a critically central is the collusion of public and private sectors. The Odebrecht case highlighted the failings of the institutional architecture. To fight corruption, you need good prosecutors who are independent and autonomous, not affected by or subjugated to political interests.

Another issue is that of transparency of public expense. In Mexico even in the democratic era, political parties find loopholes in laws to channel funds in a 'legal' way. So a scrutiny of public expense and involvement of civil society. How do you make the political classes oppose corruption when the action itself goes against their own interests? This comes from the mobilisation of civil society.

[The idea that 'civil society' will somehow oversee the inner dealings of government and political parties appears somewhat naïve and idealistic].

The danger is that new institutions formed to fight corruption themselves become a simulation. The population must be educated about what is corruption and what is not corruption.

[Again an overtly simplistic solution. Previously the Catholic Church provided the guiding light via eons of history, ritual and the use of endangerment to the soul, per the afterlife. This was indeed a form of brainwashing, yet it provided for many a moral framework. The demise of the Church and the freeing of people's minds, has seen that influence much reduced, for good and bad].

At the moment there is enormous social confusion about what is right and what is not right. So we need to create new social standards for the behaviour of citizens in what is today's 'transition context'; it is essential. That possibly starts with the political funding process, given the way today the parties simply “flood with money”. And in this independent voices such as the press must be protected,

We must convince political parties that anti-corruption measures will lead to a bigger pie for all, including themselves, so reduced temptation for corruption. It is believed that in Mexico corruption absorbs 9% of financing, monies which the private sector could use otherwise.

The corrupt politicians (and others) must be 'cut-out' of the system, so that they do not infect others within their sphere of influence.

[Much depends upon the level of corruption present in any body (commercial companies, political parties, local and central government, the police, the judiciary etc. If it is essentially institutionalised then the theory of cutting-out the rot maybe far harder than believed. Likewise, those lower down the ladder of a body may revere those at the top and so themselves become corrupted, the process typically subtle and explained as 'just the done thing'. The good people with morals and foresight to see what is going on will simply leave recognising the impossibility of problem or indeed be removed by those higher up who see them as a real or potential problem. The only way to create moral bodies is to inculcate from a young age the importance of ethics and fairness, and ensure the majority good operate without the mob behaviour so endemic to the righteous far left].

Chair Vera -
We now call upon Torqauto Jardim. What can we do to end the corruption cycle?”

Torqauto Jardim -
I agree with all said. I highlight another perspective about the political advocacy about public positions. From such a position I wish to discuss both private and public sectors. As long as Brazil has such enormous political size and power corruption is inevitable.

The second perspective is an economy controlled by the government, a state run economy with state owned companies with large deficits and the existence of large unions; which stopped the recent reform attempts.

A large proportion of collected taxes (53%) remains with the central government and is not distributed to the municipalities. The Legislature is then funded via central government and the political funding process likewise comes through similar means. Why such a concentration of power in the centre?

[Today's 'concentration of power appears to have arisen from a history wherein local regional and municipal governments themselves were heavily corrupt, instigating low social and financial return infrastructure projects and other people's projects through the 1970s and 1980s that benefited local business more than the broad populace. That decentralisation was re-centralised in the 1990s to gain greater accountability].

A main concern is the manner in which certain business sectors are able to lobby central government for protectionist measures or otherwise. So we should break-up that central political powerbase.

We also need to convince the private sector that corruption is problematic to general growth and prosperity.

I was enthralled when talking to taxi drivers in Panama and Dominical Republic that they had a better grasp of Odebrecht corruption events than I did, able to name many of the indicted Directors.

Last year I visited Germany, and their biggest problem was the prevalence of absence from work via the provision of medical licenses. There millions of hours of productivity was being lost to this problem. This problem starts from a young age during schoolyears when a child complains of a false health condition and the parents get an approved medical certificate to show the school. It creates a cycle of abuse, which we in Brazil must eradicate.

I Brazil we have 17 programmes related to the refinancing of the fiscal debt, those seventeen items are an invitation to avoid taxes and so slow the repayment schedule of the fiscal debt.

[With comparatively generous welfare systems within Europe (especially versus the UK) the Germans recognise the change of their culture in recent decades and the problems created by staff disingenuously taking sick leave (this especially prevalent in local government, educational and other state run realms for all European countries given the greater innate laxity of professionalism and the culture of rights over responsibilities).

Given the size of the Brazilian state employee pay-roll and the even greater generosity of employee benefits, the productivity effects of this problem (one of innate culture) is enormous.

This 'low-level corruption' is perhaps when totalled-up as equally – possibly more - damaging to a country's development as the likes of the Petrobras and Odebrecht scandals. Since this is occurring in the core of the new middle-classes, it illustrates the still present hangover of yesteryear socialism, and Brazil's failing to get the 'cosseted classes' on board with the need for structural socio-economic change.

Perhaps its time Brasilia run a TV and radio campaign that wakes the populace up to the reality of global competition and the thus far lax reaction from many of Brazil's peoples still with a Latin “Manyana” attitude?]

Chair Vera -
Let's reconsider why is it that Latin America has such a high level of corruptio? Is the failing of the state, the judiciary, the politicians, the private sector...can we come to a conclusion?

[The truth is that with such historical political and economic volatility, plus the infighting for power-grabbing, there is little endemic trust across the whole region at many levels. This societal insecurity, and the lack of a true socio-political centralism. Hence patterns of a new gender/race based far left vs order-orientated military originated far right repeating yet again in the Brazilian election candidates, with the centre-left and centre-right diminished.

Social cohesion has once again broken-down and so it bodes badly for anti-corruption, when small to large corruption is perhaps the most powerful real-world instrument – over morality - in ideological politics].

Della Rubio -
I would say corruption is like tango, you need two to dance, therefore public-private sector deals are done. You should be willing to denounce or not participate in this game, but the business world typically says that some business is solely based upon such invisible (ie slush fund) deals; and justify participation by highlighting the employers responsibilities toward the workforce.

To combat this we need more 'Integrity Pacts' wherein entire sectors state they will not enter into corrupt deals involving kick-backs etc. If we all agree, the situation will be over.

[Again naïve, since there will always be one player who recognises what they see as a golden opportunity to enter a contract without effective competition. Many inter-company agreements from cartels to alliances fail because one of the group seizes the opportunity for profit].

Denize Dresser -
Who is it that has failed...the parties and electorial institutions. Why do our politicians act as they do? Because they can. Corruption advances (careers) until it clashes with resistance. But there is little effective resistance. In Mexico we presume this is normal behaviour. Many of the electorate simply want things from their politicians, not accountability. If we don't change this from the basis of society it will not change.

Just as it takes two to dance a corruption tango, so it takes two to refute it. Also corrupt politicians need to be denied even the possibility of re-election.

Torqauto Jardim -
I was revising the 10 promises not complied with in democracy
1. secret and closed system of power where all socio-politico-economic levels meet.
Lavo Jato , involved everyone, partly because of the limited media capabilities, the news relayed only about 10% of Lavo Jato. So we are able to see a percentage of what goes on in the large cities, but because of poor independent media networks, the rest of Brazil remains outside of this. This is very shocking. Of the 5,517 municipalities, two-thirds saw the money for school-lunches, education and health disappear. This is more serious than Lavo Jato, since it is destroying the future of Brazil.

When we think of the coming decades, the involvement of civil society is key, but more so the ability of an independent press to investigate.

Poala Belize -
We need affirmative action...we have the desire and technology.

[This nothing more than a loose catch-all of current en-vogue phraseology].

Chair Vera -
Now to offer the floor for questions”

An audience member from Paraguay -
Corruption used to be defined as an illegal advantage on public resources. In the USA the Supreme Court judged that the influence of a millionaire to influence politics was not corruption – I would say it is.

Denize Rubio -
I would say it is also, but the political financing scheme is different our countries, our countries are public-private, the USA's 'open system' is only for the Presidential election, and in that the last 4 candidates chose private funding over public because of the far greater monies made available.

Torqauto Jardim -
This is very much a cultural matter, in the USA it is the norm, here it is not.

Denize Rubio -
Agreed, but the private financing of politics is the window-opportunity for corruption.

An audience member – The Foreign Minister of Panama -
Corruption is defined and puniched in different ways around the world, most typically that of a company fine. In my country we use a term – 'the civil depth' of a company – which means that if a company is of systemic importance to the economy it is allowed to carry-on. My question is 'Is this legitimate? To allow a guilty company to continue?

Denize Dresser -
One crucial word not mentioned yet is the word 'impunity'. Corruption continues when there is impunity. In Mexico 98% of those identified have not gone to jail. This impunity muct be removed through judicial power and civil society. The ex-President Salinas is still socially accepted in the elite world of gatherings...there has been no social sanction. People should be willing to effectively dismiss him, because otherwise is to condone what he has done. Only in this way will we start to create a new political culture.

Chair Vera -
Yes this is a good idea, but first he must recognise his mistakes, pay for them and then be rehabilitated.

Another audience member: a Brazilian citizen -
We will have an election with new of non-donations. But we know that those with the most cash are drug-dealers and churches. This is a big risk for the country, to choose from candidates that have connections to these two sides.

Torqauto Jardim -
Well, you asked and answered at the same time. In electorial law there is a ceiling for expenses, and the breakdown of costs is pretty well known. The involvement of organised crime is usually seen by the type of habitation a candidate may have gained, outside of his/her own payscale. The churches engaged in politics is an enormous weight for us. But it seen elsewhere, such as Italy with the Vatican or the Baptists of the Southern USA, things have become better recognised. Hence the religious connection is a problem, but the real problem is with the drugs.

Chair Vera -
To those countries where corruption is very strong it is often related to candidates populism. Hence populism and corruption are not diametrically opposed entities...and this is a problem.

Denize Rubio -
Typically more corruption, less free press...and the more attacks against free press the more corruption. To fight against it:
- less impunity
- less indifference
- more integrity
Chair Vera -
The President of Transparency International has made a perfect summary of the aims of this discussion.


The fact is that in countries with large poor populace, and slow or volatile economic development, run by those who typically see themselves as part of the ruling elite, exist in what they recognise as an unstable economic environment. So, many on 'both sides of the tracks' give little credence to morality or values beyond their immediate personal sphere; even that not untouched by machination for the worst of them.

Such people will typically justify their actions to themselves as either 'their opportunity' to get off the bottom social rung, or at the highest level see it as part of 'the game'. And in both worlds often do not have the courage to speak against those who drew them into corruption; for fear of castigation and social exclusion - often with little or no faith in the capabilities of the public legal system to ensure right prevails.

Plus, all too often the participants in corruption have been so subsumed by everyday group habits and behaviours, that they fail to analyse or differentiate their own actions.

The now very prevalent activity of disingenuous 'social acting' toward others outside and inside of their group, illustrates an activity in which the people themselves are so removed from the values of truth and decency. Many children learn to act as if not guilty when understood to have been naughty, but instead of truly growing up, many continue as such and their capabilities of deception become ever more sophisticated, and their self-accountability never even considered because they forever operate at the lowest moral level.

Since the GFC damage of 2008, portions of the world's populace at all social levels in both the West and LatAm have become personally ideologically split between those few who are trying to build a new future and the increased many who are simply using corrupt actions against others to serve themselves at all levels of society and across all ages.

As the saying goes...“power corrupts and absolute power corrupts absolutely”, but corruption begats corruption begats corruption, and the societal and economic effect is enormously detrimental when belief and faith – the lubricants of socio-economic cogs – deteriorate.

Brazil is undergoing its own post Lavo Jato top-down cleansing, and much of the West needs a similar process, from the (broken) middle-up and middle-down.

LatAm, led by Brazil, still has an enormous potential that much of America, Europe etc does not, hence Brexit's reach-out to the the rest of the world, and the UK's political sub-text to the royal wedding.

But for all the rhetoric of the WEF discussion, it takes strong moral leaders whose own actions speak far louder than 'preaching' words. As seen in the previously drug-infested favellas of Rio de Janeiro and elsewhere in the run-up to the Olympics, it takes a strong and hawk-eyed moral political and legal presence of which the corrupt will be fearful and the everyday person comforted and  inspired by.

Saturday, 28 April 2018

Macro Levels Trends – Brazil – Latin America: WEF 2018 : Infrastructure

Given the importance of Brazil's domestic geo-economic expansion, investment-auto-motives has tentatively explored the topic of regional and national planning.

With obvious interest in the lessons learned from the West, from the chaotic expansion of Medieval times, the grande re-planning of the early to mid Enlightenment period (ie Wren's London, Haussmann's Paris) and throughout the 19th and 20th centuries with the rise of properly planned but still humanistic and organic 'balanced environments' per the Garden Cities ideology and its contrast to the geo-metric and harsher Modernist approach seen with post-WW2 'New Towns', aswell as the Post-Modernist efforts to once again create blended multi-use environs to ensure 24/7 activity.

All aspects seen as infusing the archetypical EM Mega-City.

And of course also lightly viewed have been the experiences of Brazil's and others efforts to create anew, from Kubitchek's Brasilia (which sought a co-axial of 'modernist monumentalism' and 'humanistic habitation), to the recent efforts toward fully fledged eco-cities such as the UAE's Masdar.

Yet cities old and new, and separate industrial-service centres from ports to business parks, all require physical and digital connectivity between and within.

But beyond this typically regional-centric approach, investment-auto-motives believes that – after the chaotic rise of olde-worlde AM environments in which the urban battled the rural leading to innate planning compromises, Brazil given its scale and remaining potential could be the first country to become sensitively 'nationally re-planned' at the distinct physical and digital levels and crucially at their own 'co-axial intersect'.


The extremely important issue of infrastructure was addressed by a small but informed panel, drawn from diverse investor and operator backgrounds.

As previously [investment-auto-motives' comments follow in parenthesis paragraphs].

The Panel:

Joe Leahy – Chair – FT Journalist
Georgina Baker – VP Int. Finance Corp. (LatAm-Caribbean/Europe/Central Asia)
Joe Kaeser – CEO and President of Siemans AG
Rodolfo Spielmann – Head of LatAm – CPP Investment Board (Canada)
Marianna Luz – Head of Embraer Foundation & Head of Sustainability at Embrear Aerospace

The session started with a small joke about the time taken in traffic to reach the summit, and mention of the fact that Brazil itself is the paradox of small clusterings of great infrastructure – typical of specifically dedicated satellite towns – against the broad backdrop of far poorer regional and national infrastructure.

Overall Brazil's infrastructure is quite 'patchy', the WEF's rankings illustrating Brazilian infrastructure at 73rd against its overall rating at 80th. Look closely at the topic and its ranking is increased thanks to string availability of flights and telephone services. But roads, ports and railroads actually rank beyond 100.

The first question posed...

How can a high quality, high-resilient 'pipeline' of infrastructure be financed?”

Georgina Baker -
The IFC has been operating in Brazil/LatAm for many years, but recently we've been looking to see how to involve the private sector, namely institutional investors...and so created a programme for 3 large insurance companies whereby each provides $0.5bn to follow IFC's own investments. This based upon the recognition that certain areas/sectors were to be avoided. This was a big deal for such companies that known OECD Infrastructure well, but not elsewhere, so 'nervous' about EM markets. So when alongside IFC much more comfortable.

[The apparent 'ignorance' of such highly regarded and well resourced insurance companies is surprising, given the 'maturity' of many EM markets over the last 25 years, and the enormous current and future pensions obligations to their largely (high payout) European client-base. It was assumed that though historically conservative, these firms would be more advanced regards EM differentiation and understanding than they appear; though obviously very mindful of specifics of national and regional socio-economic and so political instability ].

For the most interesting thing was the 'demonstration effect', where they can come with us into certain markets...and once done with us they will do it on their own and bring others behind them; and that is the most fundamental breakthrough that we've had. They too can do that.

Joe Kaeser -
To attract such infrastructure needs a plan and that plan must be set forth by the government. What is my Energy Agenda?, Mobility Agenda?...How to efficiently transport people and goods?...and the financing will come because there is so much money in the world, and all the large institutionals are dying to invest. But there has to be a plan for Localisation, Innovation, Social Development, and that has been the recent 'Brazilian Challenge' whilst (the gov't) has been busy with other things.

China has a plan and its been expanding throughout Asia and Europe with the 'One-Belt' initiative.

India has a plan, even if Modi has faced some problems. So the BRIC 'tail-end' works well, but the front (Brazil, Russia) needs to catch up. Hence our signing of an agreement with us and the Brazilian Gov't very recently to develop the country. How can OEMs help with localising and efficiency...and then they will come...because investing in infrastructure causes inflation (and so growth). And that's what you what in pension funds' assets [AUM].

So we need a plan for Brazil. It will bring [further] industrialisation because Brazil has an interesting 'token' above and beyond 220m people and young people etc; Brazil's got natural resources. So Brazil sits at the very beginning of any industrial value-chain, and you build the next level of the value-chain.

[This has been well understood for over a century, and shown to have been prominent in the attraction of FDI since the 1920s with Ford, GM, Chrysler and later in the 1950s Volkswagen, and 1960s Renault, Simca and the effective domestic JV that was Alfa-Romeo/FNM. So whilst hardly a new notion, well worth repeating given the enormous commercial 'activity span' Brazil can undertake. Herein we see that it is well placed to be the physical provider and later digital provider of 'the Internet of Things'.

Germany cannot do we look elsewhere...and the Government must put the plan in place”.

The Chair restates the importance of the MoU between Siemans and Brazil, then brings in another

Rodolfo Spielmann -
We are LatAm infrastructure investors with roughly $6bn invested, starting in Chile in 2006 with assests still owned today...then into Peru and Mexico and last year within Energy in Brazil. This is just scratching the surface regards what's needed There are good examples to study, such as Australia, which did 3 things well:

1. Create a pipeline of scalable projects, beyond the short-term and bringing together different Ministries (Transportation, Natural Environment, Finance, Planning and Energy)..all behind a common agenda...across different sectors across different common goal far into the future. Its got to be the conviction of the whole political class across political parties.

2. These assets have to be available in a 'de-risked' manner, typically not 'green-field' which includes too many risks during the initial development phase. So we like brown-fields, which become brown from green after perhaps only 2-3 years, and we stay thereafter for decades. For those companies, they then receive our money and that allows them to develop the next set of projects. They have a higher return, but based on higher risk of course. And that's a nice concept of how to use different pools of capital for different phases.

3. Stable Regulatory Environment. This doesn't always happen and needs strong independent regulatory bodies (little influenced by political schisms).

These 3 items are easily said, but difficult and necessary to act on...the 'guiding lights' to see in EMs'.

As per the 'infrastructure pipeline' their can be different financing sources...(capital markets listed) privatisation, or new concessions, or specific co-party private treaties, asset sales by State Owned Companies (eg Petrobras). And of course there's the new development 'green-fields'.

[This illustrates the 3 investment rules CPP operates within, but there are obviously a plethora of other analytical macro and micro economic measures and broad PESTEL analysis, each with different model weightings, and most likely attempts at 'scenario analysis'. In effect 'investment safety' per country by country variations in trend continuums between 'diminished-socialism' (eg Cuba) and much increased 'free-enterprise' (eg Mexico) so as to gauge operational risks and if very necessary plans for country or sector exit].

To give a example in Chile, we have an investment in a Toll Road company, and within that company there is a potential new projects department which evaluates where potential new infrastructure could be created. A presentation is given to the government and then an open Tender to interested Operators. There is the possibility that the originating corporation may not win that Tender, in which case they are compensated for the costs of drawing-up the concept plans and schedules. So there is incesntive for private parties to propose projects even if they might not win the contract.

Mariella Luz -
As regards the 'infrastructure pipeline' I begin with the sustainable part of it, especially aboout the need for retrofitting and upgrading and yes that needs finance. We have been developing sustainability commitments between government and industry to make such processes possible, and bring the efficiency we need to these processes.

Within aviation there's obviously potential for much, with specific potential in air traffic and control systems. You (to Leahy) spoke about the problems in getting here, but that's a problem we all face as passengers on a flight when forced to circle above the airport...that's about infrastructure...and that delay affects both the person directly and the environment [ie burning fuel] and so has a sustainability impact. By overcoming such problems we could have a more cost effective airport, more energy efficiency and greater well-being. So its about sustainable development and equitable services.

The Chair asks why investors might be nervous about EM projects...”what are the reasons?”

Georgina Baker -
If you know how to operate within OECD markets but unfamiliar with others, you may not know how to assess Credit Risk, Market Returns, Asset Allocation. Its easier to stay where you are. But if you partner with IFC [implicity familiar because of 'boots on the ground'] we help look after that money because its a shared risk. Whether Mozambique, Angola or Brazil, these are risks we understand well. Governmental and institutional stability is key, and there has been instabiility, but the 'we' has always been there.

We say to those (the big pension groups) providing $0.5bn...'let's imagine if you had invested 5 years ago or 2 years ago? And we played-out what their portfolio would have looked like. We invest slivers over time and projects, so its not like putting big lumps at risk in one or two projects. But if you have a portfolio of say 80 projects in 30 countries the risk is minimised. Unlike my panel colleague who invests in already performing brown-field, we invest in green-field where risks are higher but that is our strength. We deploy Performance Standards that include Sustainability to ensure conservative client companies will not be exposed to too much risk and won't be on the newspaper headlines.

[The raison d'etre of IFC's existence is indeed to quell large institutional fears about EM issues, so it seeks to offer confidence about individual country knowledge, the need to de-risk an infrastructure portfolio via holdings spread, the need to drip-feed investment on a phase by phase basis so as to both support the project and indeed limit exposure if macro or micro problems occur and recognition of the great CSR obligation upon societally important pensions and insurance institutions.

As such the answer was expectantly formulaic and a partial PR exercise for IFC, but illustrates to the uninitiated about how the accrued paper and cash profits such large institutions hold, and a portion of the current payments received (the 'float') from AM countries are channelled toward EM regions].

The Chair asks Spielmann if CPP's “brown-field” development mantra is sacrosanct?

Rodolfo Spielmann -
Its a little more nuanced than that...we will expose ourselves to a fraction of the available green-field, but we don't for now invest completely in a singular project. Our method is to focus on brown-fields and asset-recycling so providing capital to others for the next green-field and we become interest when that becomes 'brown-ish'. But our Chilean experience [because of the format of the regulatory/policy system that encourages forward planning] means we have a broader appreciation that pure brown-field.

Joe Kaeser -
This is all about opportunity...and greenfield often requires a public-private approach. The best outcome is an alliance between government, finance and constructor-operator (or constructor them operator). Then you have the knowledge to execute either as brown-field of green-field, a regulatory body that ensures the investment climate remains comfortable. Hence my words earlier, there's got to be an economic development plan that extends over the lifecycles of governments and that of the general economy.

Across LatAm, Chile appears to be ahead of the crowd, with Argentina still fluctuating, and Brazil at the beginning of a new era. It could well take off if a public-private investment mentality prevails; since both private enterprise and indeed state firms are effectively waiting for permission with eagerness. So I am comfortable with the the capabilities, spirit and power of this country. But there is a lack of a long-term vision and plan.

But it's also about SME's too build them up, so we have a broad base of economic development, not just a few Petrobras or Embraer etc. And that needs a plan, and 'everyone will come'.

The Chair interests by highlighting the instability that creates ever changing plans, such as the Energy law about electricity

Yes, but the customers don't change and so you have to have sustainable, reliable, affordable electrical power....and everyone talks about 'automation' and 'the internest of things' but its all crap if you don't have electrical power and reliable logistics. It all becomes ludicrous if you can't beuild a factory in a meaningful way.

And as for the energy debate...Brazil had renewable energy before people even used the term, which is Hydro...which works even if the sun doesn't shine and the wind doesn't blow.

[Kaeser effectively puts things into perspective about the importance of Hydro-electric power to Brazillian activity. This recognised since the late 19th century and vital to the regional planning that underpinned the FDI efforts to attract FIAT manufacturing investment in the late 1960s].

The issue now is climate change, and that effects waterflow and quantities. And the attractiveness of investing comes with efficiency...asset management. We have to make it happen and not talk so much about what could have happened or should have happened.

The Chair asks about the “bottle-neck” challenges

It took time in Germany to convene a stable government, but here in Brazil I hope it happens quicker because we need firm government plans and multi-stakeholder discussions regards a B2G (Business to Government) and a G2G plan. Come with a 20Gigabite plan, a 5000 Km grid optimisation plan, a 10,000km roads plan, an urban mobility plan. Its not rocket science to put railcars underground and make traffic work.

And contain the root causes of inflation, interest rates can be raised but it will kill the economy if the root cause of that inflation is inefficient operations (so necessitating higher transactional costs). The time taken to get goods to the customer is key, and if a large percentage of food is rotting en route to the end user it raises the price of the received goods even more. All this has nothing to do with interest rates, but about efficiency.

It's about a convergent approach to get it done, and there's enough money.

Georgina Baker -
It's easy to say there's enough money, but the majority of that money comes from the government and it must rationalise its infrastructure spending versus its national indebtedness.

[This is a central point since invariably the onus to retain national sovereignty means typicaly a far greater portion of funds originates from government. And – as illustrated in previous weblog posts - Brazil currently has a higher Debt to GDP ratio than its BRIC peers.

However, arguably though not as economically powerful as India or China, it is arguably further advanced regards its general economic base as a consequence of its full value-chain – thus is a much advanced EM.

This suggests that with greater value creation capabilities it could maintain or expand its national debt levels to finance the obviously much needed infrastructure projects that would serve all the country and especially long since under appreciated inland regions.

A well considered balancing act between maintained national debt and perhaps greater new private investment than the historical norm, would be the best path forward].

Joe Kaeser -
I wouldn't expect the government to solve everything and especially the problems of the private sector. There has to be a long lifecycle framework that allows the private sector to invest. I'd be happy to invest a billion Euros tomorrow if I had a roadmap, and that billion would be matched over again by private equity or pensions company anywhere in the world. That becomes a ten billion Euro fund but there has to be a framework to allow the private sector to get on with the operational task of making it happen.

Rodolfo Speilmann -
I agree, conventional infrastructure offers much, almost all sub-sectors profitable in themselves, the exceptions being marginal projects such as certain green-energy - like solar -which means marginal returns presently and so discouraging. We've just taken on wind-farms beyond airports and ports. It is profitable.

Together, institutional funds and Sovereign Wealth Funds amount to $7 trillion of investments, and yes most are government bonds, but we have long horizons regards (infrastructure) equity. Our partner is a pension fund and we are still receiving both new funds (for AUM) and the (dividend and capital) returns, both of which need to be re-invested.

So its less the availability of capital and much more prescient the availability of projects.

Joe Kaser -
The common thread between all the countries which are expanding and developing is that they have a solid infrastructure plan to do so, such as a target to install 10 Gigawatts over 5 years; and then they went to auctions (Contract Tender Auctions)

So how about we (addressing Spielmann) present such as plan for NE Brazil: 5 GigaWatss at 3 cents per KW/H ? This is 'putting the potato on the fork' as they say. You need to be clear, specific, precise and not just try to save the world by talking.

The Chair highlighted the fact that Brazil has had plans, such as Dilmar's 'Growth Acceleration Plan', but they change. And there's BNDS [the government owned lending institution, whose remit has altered recently to become more commercial and long-termist]. Inflation is low at the moment but it could be a cyclical low. How to solve that problem? [ie BNDS's slow transformation into an as yet unclear entity].

[investment-auto-motives previously provided a very detailed graphic of how BNDS historically fitted into the country's top-down financing structure alongside its prime educational-research centres; to provide overview of the 'privatisation potential' on a sector and company basis].

Rodolfo Spielmann -
BNDS has changed to align to market rates [not the deliberate low-rate loan provider it previously was], and not necessarily fund the big national champions that can access international finance. So it could finance the botttle-neck projects such as green-field, or 'frontier' new companies, or SME long-term financing. That could be the vision, similar to the German Re-Construction after WW2.

But the long-term finance has to come from international investors, and that $7 trillion doesn't include Insurance, Banks and Private Equity could provide. And the capital markets themselves can be further developed, with Infrastructure Debentures slowly growing in volumes. Then the government need not put much money in, just provide tax incentives and other similar policies.

Joe Kaeser -
You must be sure about the 'take-up' by such parties to 'close the loop' and crystallise the process. There are thosands of examples around the world.

Georgina Baker -
But you also need to be assured of the strength of the local financial and legal systems.
The Pru (Prudential) has been working on this for 20 years so that foreign investors are treated the same as local investors; access to the same tax regime etc.

And thus far in LatAm over 30 projects in the Transport sector achieved recently because FDI at last believed they would be treated exactly the same.

[The issue about local market strength is critical, since this effectively both underpins and is affected by the modus operandi of the national/regional legal system.

Also, China's recent announcement regards the opening-up of its auto-sector to FDI – without the need for a JV Chinese partner firm five years from now – appears an important milestone for the BRICs (presently excluding Russia) and CIVETS etc, and should encourage further sector and FDI liberalisation].

We need to move away from 'just having a plan'. If just planning was the problem it would have been solved by now. It must be recognised [for all the positive chatter] that many EM projects are not viewed by OECD-based institutions as 'investment grade'. The regulatory regime of the institutional investor is important. My experiences of working with French and German investors is that their own domestic regulations require that all their investments worldwide be 'investment grade'. Most EM projects do not meet this criteria, so you have to bridge that gap.

Joe Kaeser -
But doesn't having a plan also mean knowing how to run your country? This including the legal system meet international dispute standards. This is what I mean by plan.

[This was not made explicit or implicit previously, and it took Ms Baker's comments about a lax or problematic or unenforceable regulatory - critically important issues – over half an hour into the discussion. This is the EM problem between the ever amazing potential and the historical economic pitfalls and now much of these tamed, the present-day real-world business environment.

Bodies such as the UK DTI's International Trade agency promote the potential of EMs – such as LatAm expansion for Land Rover – but in the rush for BREXIT expansion also seemingly gloss-over the potential for down the road problems when invested in the region].

Mariella Luz -
In our sector we do have plans, such as that managed by UNOCA (the UN Organisation for Civil Aviation) which illustrates that infrastructure will be the base for any future innovation or technologies in the sector. So UNOCA has been promoting the need for PPPs (Public-Private Partnerships).

And looking at Brazil, we (Embraer) are as producers of regional aircraft looking to expand regional airports and overall (national and international traffic) integration. Given the size of the countries population, its demographics, the potential economic expansion rates etc, we need more airports. The reality compared to the LatAm region is that Brazil is under par [ie under even reletive capacity regards necessary passenger air travel and air-freight. There's enormous potential and great need, and the stakeholders are in discussions; so the plan is there.

The Chair mentions the importance of Sustainability, and then opens the debate to the audience.

One member :
We read a lot about Chinese investments in Brazil, which I believe is mostly the electrical sector, so what do the Chinese know that you don't or vice versa? And previously the Chinese bought things, but are now major players. Help us understand what the Chinese are doing?

Georgina Baker -
Its about 'risk-appetite'...they come from EM and understand EM and have a different [ie higher and more long term] risk appetite to other investors. Able to put a lot of money to work and understand the risk-reward function because [having been through similar themselves] they understand the risk.

The previous example I mentioned was begun by PBOC (People's Bank of China) with a $3bn initial stake via IFC, and they did the same with the Inter-American Development Bank and DBRD and others. That money enabled IFC to build its [project portfolio] platform so they have an enormous amount of money, they can work and have a commensurate risk-appetite. That's my opinion.

Joe Kaeser -
I understand markets better, but (the Chinese stakes) could also be a strategic interest. And I would say this is so for Brazil and Africa – their global view of things. China views developed economies like Australia but sees greater potential in still developing regions of LatAm and Africa. They can bring a lot of money and get strategic interest in return

The Chinese are very smart, long-term orientated and don't talk much...and if they do they think first, and then act. They have a plan but its not by the quarter, year or decade, their plan is about the long-view. If you talk to Chinese companies and leaders they posit that the last 200 years was a minor aberration of their long-term global development. Think about this and you understand why they've been so interested in agriculture and natural resources, especially so given their G2G remit.

Financial investors obviously need a far shorter term view, whilst Strategics like us are in the middle. So the Chinese position requires much consideration by our sector so as not to be left with a single option.

[This simple, recognised but vitally under-appreciated aspect of the global economic dynamic over the last 2 decades; at least as covered by the media. Africa's initial welcoming of the Chinese to generate trade and build infrastructure (rail, road, telecoms, schools) has latterly seen greater disquiet amongst African locals as the once small-time newcomer local Chinese trader has started to monopolise local and regional small and medium size agricultural production, such as higher value poultry farming and trading. Able to access greater finance possibilities from home, the Chinese sought to achieve scale production and sales to dislodge what were generations-old and very separate African chicken farmers and traders.

This increasing disquiet has latterly led to some African governments actively encouraging the return of the old European 'colonists' to both partially protect domestic SME activities and to obtain higher competitive bid prices for land or goods between the Chinese and other foreign interests].

Rodolfo Speilmann -
There are different types of Chinese investors of course, Strategic vs Institutional, and the latter think like us given their own business remits. What we need to understand are the Chinese SOEs, since we need to team-up with them. And that will only grow and is a new-reality and a learning process.

And I would concur...they are very studious, laborious in understanding an industry, and not quick in arriving at conclusions. So the picture presented is that of long-term interest, not just financial results.

Mariella Luz -
The Chinese have a huge interest in Aerospace, with long business cycles of 15-20 years and major potential on both sides of the Pacific and Atlantic, with whole sector interests from manufacturing industrialisation to aircraft production to airport infrastructure.

Another audience from S&P Global member asks :
Much said about the Regulatory framework, but what about Governance and how to improve that Governance?”

Georgina Baker -
From the IFC perspective the issues of Environment, Social and Governance must meet standards. But its a journey with all clients and so seek to reach the best standards in corporate governance. As an economic development body it's integral. We recognise they may not be there when we invest but ensure that they are created within a short time.

Rodolfo Speilmann -
For us Compliance is almost a 'gateway' item that is non-negotiable. Governance is negotiable but Compliance is not. Controls do evolve, but they are key to any long-term investment, Governance and Transparency are related to the business culture, Compliance in Brazil today given ever greater importance on company boards, with many external advisors able to assist. So a big push to to increase that. But the core values have to be in place initially, then you can formulise it. As per Governance, the independence of boards, the qualification of boards, there's a whole set of items being applied.

And that's part of our value-addition, to bring institutional standards to our invested companies.

The Chair asks “how do you convince FDI investors about Brazil, after 'Lavo Jato' and the construction sector debacle?”

Rodolfo Speilmann -
We are working constantly to explain the context of Brazil and the medium and long-term. Brazil has improved...5 to 10 years ago it was looking good at the surface, but was rotten inside. Maybe I exaggerate to make the point, but now we see just how rotten it was and is being addressed. Now we are taking out the 'cancer' and its taking time for the patient to cure.

What is vital is that the cure must come through institutions, not some central Polit Bureau, but from the multitude of individual but aligned investment influences. There would have been good investments 10 years ago, but without the clarity [and so higher risk]. Today there is more transparency, but it is an onward journey for Brazil.

The Chair then asks about the compliance paradox of the great problems for infrastructure companies in obtaining Environment Compliance Licences, yet the build process still creating environmental damage. “What can be done?”

Mariella Luz -
Compliance is here to stay and that's a good thing for every company and government. As an industry (Aerospace) we are focused on the environment worldwide, so not a Brazil basis or Embraer basis. It's about complete systems not individuality, with global processes and solutions.

The sector states that by 2050 it will reduce its CO2 emissions by fifty percent from the base-line of 2005. This done through a 4 pillar strategy: Technology, Logistics, Infrastructure, Marketplace.

[This did not directly answer the question about Brazil's compliance paradox in infrastructure building. If known, some site specific examples would have been very useful, or indeed a glimpse into Embraer's future technology strategy that better integrates airplane and airport through energy and digital.

Instead, given the different development paths each EM country is on and the different airport and airplane infrastructures needed (eg primative 'bussing' STOL locations in mountainous or forested areas vs a regional airport vs greenfield major international sites per the A380 vs high-volume passenger transfer locations for mid-size jets) the 'global systemic' answer whilst partly true is also too simplistic.

Each airport and helipad development is essentially categorised and so must both share certain characteristics whilst also very different; so making each effectively a template of a model type.

This needs to be better explained to the investment community so ensure specific enviromental regulatory compliances are created as fair per type, and are eventually met by the infrastructure builder-operator at completion and in use].

The Chair asks the audience for a question:

Member from American Tower Corp..
Could the panel comment on the Telecom-Information-Communications infrastructure...the state of things and bridging the gaps there?”

[None seem too keen to answer, possibly illustrating their unfamiliarity with the subject}.

Mariella Luz -
We have a project with the Brazilian government, Embraer and Intelbras as partner, to build a satellite, with first launch in French-Guiana last year, and has both civilian and defence purposes.

The gentleman from American Tower Corp states:
Theres significant under-investment at present, if you look at all these infrastructures much will depend upon communications connectivity to bring efficiencies and productivities etc...I think there's a gap, the discussion rarely had en mass, instead led by certain companies. This needs to come under any long-term vision plan.

Joe Kaeser -
I agree...infrastructure is about connectivity, the 4th Industrial Revolution, the Internet of Things...none will work without it. 4G looks great (at the symposium site) but what about the suburbs? And so questions about autonomous driving without connectivity. Without it theres no progress on exchanging data to optimise things.

The Chair prompts about the 'Digital Alliance':

Joe Kaeser -
Of course...its central...we don't talk about how great software and cyberspace is, but to merge the physical world with the virtual world. And that's what many people forget when they talk about the next generation of manufacturing, engineering, industrialisation.

Some people try to make us believe there's no physical world anymore, there's no molecules and its all cyber-based, but there is wood and plastic and chocolate and cars and carpets and what-have-you.

Connecting the physical world with the capabilities of simulation and analytics and bring that knowledge generated in the virtual world back into the physical processes...that's the recipe – whether flying aircraft or connecting people etc etc.

And similarly, teaching the young that the physical world is not out of fashion, infact the physical becomes a better world because its enabled by the virtual world, not the other way around. So train them about man-machine interfaces and its not the old oily-greasy stuff anymore. You work with your brain and your hands together.

Because if we don't get the next generation to believe about the 4th Industrial Revolution, there will be a different alternative revolution with burning cars, not self driving cars. IT industrialisation has split society and we don't want to split it further apart.

We need to re-integrate society via infrastructure before the rhetoric of a complete IT society. If people don't understand they are scared, and they prefer their [very necessary] safe [ie personally controlled] circumstances. Technology is not the hold-up...its society's perspective. Hence the importance of society's leaders.

The Chair sums-up with:

1. The desire of intermediate bridge companies to bring institutional investors in EM regions
2. The need for an Economic Development Plan (meaningful and far reaching)
3. Such Plans must endure across political and business cycles.
4. The possible lead of the airline industry in Sustainable Development and Use.

To End -

A general interpretation of 'Building Brazil' by investment-auto-motives...

Brazil's own osmosis of its innate value systems has through its history been 'bi-polar'. The very different influences of the obviously Latin and erratic Portuguese in the early years  of 17th/18th century trading, then partially countered by the far more puritanical German and Japanese immigrants in the 19th century; whilst the British trading influence was fluctuational in the period, with both long-termist projects and 'get-rich quick' efforts. By the early 20th century the Americans were the driving force with a similar 'Anglo-American' mindset. The post-WW2 era saw the massive influence of Volkswagen and the Germans, then the Italians with FNM and FIAT in the 1970s.

Each development era then set a mark upon the psyche of all social classes, whether that be selfishness and exploitation of the moment, or building toward a better unified future. It has been the tension between the more evident Latin and the less obvious but powerful Tuetonic, that rules the mindset of Brazil.

The very closely-knit German immigrants (of simple, Lutherian background) soon realised that to avoid innate problems and so prosper in their own way they had to quite literally separate themselves from the worst elements of Latin culture, and so quintessentially German towns like Blumenau and Pomerode were built as enclaves.

Obviously, the Latin influence over Brazil has been far greater given the mostly Portuguese roots of the establishment, but herein again in a schism between the archetypes of the old trans-Atlantic 'trader' (dealing to be 'in for the kill') and colonialist (setting out plans for the long-term). And one influence undermines the other.

To see Brazil prosper over the long-term and fulfil its potential, the Teutonic influence must return.

It was seen in the socio-economic and cultural transformation of the Sao Bernardo de Campo area when VW Fusca production imported German values, with logical rationality balancing Latin intuition and emotion.

With that marriage of mind and spirit physically manifested in the 2D 'co-axial' building-plan of Brasilia.

The future of Brazil with the digital dimension reaching up to 'the cloud' now 'tri-axial' and a fully 3D future maximising mind and spirit – echoed as industry and the arts with e-enablement - offers much  21st century potential.