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Cablegate: Opic Ceo Mosbacher Highlights U.S.-Colombian

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RUEHQT/AMEMBASSY QUITO 6028

UNCLAS BOGOTA 006957

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C O R R E C T E D COPY TEXT

EEB/IFD/OIA PASS TO OPIC KCALLAGHAN
E.O. 12958: N/A
TAGS: ECON EINV EFIN ETRD ENRG OPIC CO
SUBJECT: OPIC CEO MOSBACHER HIGHLIGHTS U.S.-COLOMBIAN
INVESTMENT POTENTIAL

REF: BOGOTA 6499

1. (SBU) SUMMARY: In September 10-11 meetings with government
and private sector representatives, Overseas Private
Investment Corporation (OPIC) Chief Executive Officer (CEO)
Robert Mosbacher, Jr. highlighted the potential for increased
U.S. investment in Colombia and the range of OPIC services
available to facilitate U.S. investment. CEO Mosbacher
underscored the role of increased U.S. investment in
reinforcing the economic development benefits of the
U.S.-Colombia Trade Promotion Agreement (CPTA). President
Uribe identified housing, energy and infrastructure as
critical sectors in need of increased investment.
Separately, business leaders expressed broad interest in
taking greater advantage of OPIC services. Together with the
Colombian export and investment promotion agency, Proexport,
CEO Mosbacher signed a Memorandum of Understanding to
cooperate on investment facilitation. END SUMMARY.

President Uribe and Economic Cabinet Welcome OPIC Engagement
--------------------------------------------- ---------------

2. (SBU) President Uribe opened his meeting with CEO
Mosbacher by describing increased investment as a "daily
concern" for his administration and outlined GOC efforts to
encourage investment through tax incentives, stable rules for
investors, and regulatory reform. He noted that these
efforts, along with Colombia's postive economic conditions,
raised investment from 15 percent of GDP to almost 27 percent
since 2002. Uribe expressed interest in OPIC's work on
housing programs in the region and said the GOC has tried to
encourage the private sector to get more involved in
low-income housing construction. He also suggested that
Colombia's public pension and worker unemployment funds may
have resources to invest in housing development. In
response, CEO Mosbacher detailed OPIC projects which helped
create a market for 15-year fixed rate mortgages in Central
America and have leveraged more than USD 7 billion in housing
around the world.

3. (SBU) President Uribe said Colombia must also catch up on
developing modern road, port,and freight systems. He
encouraged OPIC to look closely at infrastructure projects as
well as the Colombian energy sector. Mines and Energy
Minister Martinez said Colombia must add 6000 megawatts of
electicity generation capacity over the next 10 years and
will solicit several power generation project bids by the end
of 2007. President Uribe and Minister Martinez both
described biofuels development as a priority. CEO Mosbacher
said OPIC wants to support clean energy development projects,
including biofuels production for domestic consumption. CEO
Mosbacher encouraged the GOC to consider utilizing biofuels
for electricity generation as a means of reducing dependence
on thermal generation plants.

4. (SBU) In a subsequent meeting with the GOC's economic
cabinet ministries chaired by Finance Vice Minister Juan
Pablo Zarate, representatives from Finance, Foreign
Relations, Transportation, Agriculture, Planning, and
Environment and Housing emphasized the Uribe administration's
committment to increasing investment in housing,
infrastructure and access to credit by 2010 as part of the
administration's comprehensive poverty reduction strategy.
National Planning Director Carolina Renteria said her office
wants to facilitate the building of 800,000 low-income
housing units over the next five years for displaced persons,
demobilized ex-combatants and other vulnerable populations

through access to credit, government housing subsidies, and
construction projects. Vice Minister Zarate characterized
the Colombian mortgage market as inefficient and said that no
real secondary mortgage market existed. He suggested OPIC
expertise in the mortgage sector and in securitization would
improve the situation.

5. (SBU) Vice Minister of Transport Gabriel Garcia described
eight low-emission public transit projects the GOC plans to
request bids for soon and suggested some might qualify for
OPIC financing. CEO Mosbacher acknowledged banks' hesitance
at times to make loans to low-income borrowers, but said OPIC
can guarantee up to 75 percent of the debt of qualifying
projects if necessary. He stated OPIC's interest in seeing
any tender processes for GOC housing or transportation
projects. CEO Mosbacher congratulated the Uribe
Administration on its significant gains in reducing poverty
and increasing access to basic services. He reiterated

OPIC's interest in assisting the GOC in facilitating private
investment to meet its development goals

Private Sector Interested in OPIC Services
------------------------------------------

6. (SBU) In separate meetings with business leaders from the
Colombian-American Chamber of Commerce (AmCham), the National
Association of Industries (ANDI), and the National
Association of Financial Institutions (ANIF), the private
sector consistently characterized Colombia's current positive
economic conditions as the optimal moment for increased OPIC
assistance. They identified the credit, housing,
infrastructure and energy sectors as priorities. Many
representatives acknowledged current limits on access to
credit for small and medium enterprises as well as
chronically insufficient investment in infrastructure as key
impediments to long-term sustainable growth in Colombia. CEO
Mosbacher stated that OPIC's interest in Colombia stemmed
from the USG's desire to support opportunity in Colombia,
complement the economic gains of the CTPA, and build a strong
private sector to serve as a basis for further development.
CEO Mosbacher noted that much of OPIC's activities in
Colombia previously focused on the energy sector, but said
that OPIC could expand its area of activities to include
credit, housing, health, educational institutions,
telecommunications and infrastructure. In particular, OPIC
wants to support projects that reduce carbon emissions or
reduce pollution. He encouraged companies interested in
partnering with U.S. investors on projects that meet OPIC
standards to contact the U.S. embassy in Bogota.

MOU Signing
-----------

7. (U) In addition to his meetings, on September 10, CEO
Mosbacher signed a Memorandum of Understanding with Proexport
to provide technical assistance and promote coordination on
the submission of local project proposals to OPIC.
Implementation of the MOU, signed by Proexport President
Maria Elvira Pombo and CEO Mosbacher before an audience of
government, private sector and media representatives, will
begin with the visit of an OPIC technical team at the end of
September.

8. (U) OPIC cleared this cable.
Brownfield

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