Tuesday, January 19, 2010

Haiti: The New (Old) Frontier

"Frontier markets could become the sweet reward of 2010 if investors are willing
to take risks in underdeveloped, illiquid and potentially unstable markets."
OK. In the midst of one of the great natural disasters of our time, you could only hope governments would put geo-politics as usual aside and cooperate in anyway possible to rescue victims of the earthquake in Haiti. But instead there is a mounting battle over Haiti's security future and several nations including France, Venezuela, Brazil and Nicaragua are convinced the U.S. military is trying to occupy there permanently. The U.S. Southern Command, which is overseeing the U.S. military relief effort in Haiti, maintains that its military role is humanitarian only. As more U.S. soliders landed at the Haitian Presidential Palace the AP reported a Haitian hair dresser named Fede Felissaint said, "We are happy that they are coming, because we have so many problems," and added "If they want, they can stay longer than in 1915," in reference to when the U.S. occupied Haiti for 19 years last century. Felissaint may get his wish.

While the attention rightly focuses on U.S. military presense, much less consideration is given to the potential role of multinational companies in the country just a few months from now. Haiti is not historically well- known for being rich in natural resources, however insiders know better. In a 2007 article entitled, "Haiti's Future Glitters With Gold", geologists were said to be scouring the hilltops of Haiti in search for gold and copper deposits.
"'Haiti's logical,' says Alex Turkeltaub, managing director of Frontier Strategy Group, a consulting firm that advises mining companies. 'The assumption of most mining executives is that its proximity to the United States and its relatively small size mean that they will have a lot of leverage as large players in a small economy, and that the Americans will always be there to protect against complete disaster.'"
Before the earthquake this year Haiti was considered a Frontier Market, which could result in big profits if international investors are willing to take significant enough risks. Those risks under the current social instability would definitely be to high for any company looking to do business there. That is of course unless you send in thousands of U.S. troops to help control the situation well into the long-term.

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