Breaking News…as I finish up this post Wednesday night (3/22) , I’ve just watched Dennis Kucinich with Greta on On the Record discussing the revelation that Citicgroup took part of its TARP bailout money and made deals with Chinese and Dubai companies, in effect, sending our money overseas. The links are not up as of now, but I’ll post what I find tomorrow. In the meantime…read what follows and see if you don’t ask the questions we’ve been asking here at IA over the last few days…
Yesterday I mused about what’s going on in Canada and its ties to the U.S. financial crisis and a couple of days ago, American Lassie wrote about the North American Community. Earlier, IA took a look at a possible U.S. role Mexico and today, I’m looking at Mexico again, specifically about a certain plan that has been brewing for quite awhile and which seems about to take off.
About a week ago I opened the Albuquerque Journal’s Business Outlook section and found a full page story entitled “Planned Seaport to be the third largest in the world”. (The link is working as I write this, but because the ABQ Journal is behind a wall and available to subscribers-only, I don’t know for how long. http://www.abqjournal.com/biz/0294376619biz03-02-09.htm)
The seaport, called Punta Colonet, will be built here:
(More information on the location, including maps, at the end of this post)
A word about the columnist. Back in 2003, Jerry Pacheco was running Gov. Bill Richardson’s newly-formed office dealing with Mexican trade (see press release at the end of this post). And here’s a bit more detail:
Pacheco is a recognized expert in Mexican affairs and has extensive business experience throughout Mexico. He established and ran the state’s first foreign trade office in Mexico City during the early 1990s, and is a syndicated columnist with regular international columns appearing in El Paso Inc., Ser Empresario magazine and most recently in the Albuquerque Journal.
Which brings us back to the ABQ Journal article in question…written by the guy in the know…
Monday, March 02, 2009
Planned seaport to be third largest in world
For the Journal Punta
Colonet is a small Mexican Pacific coastal village located approximately 150 miles south of Tijuana in Baja California. Historically, this area’s economy has relied on agriculture and tourism. For the past five years, excitement and speculation has centered on Punta Colonet, as the Mexican government has announced that it will build a new Pacific seaport at this site.
The scope of the project is enormous by world standards. According to Mexican government reports, the port will be designed to handle six million containers annually at final build-out. In terms of processing volume, it will be larger than the ports of Los Angeles and Long Beach combined. When completed, the site is projected to encompass an area of more than 27,000 acres, or slightly more than 42 square miles. It will be the third largest seaport in the world, behind only Singapore and Hong Kong. It is estimated that between 90,000 and 200,000 people, a small city, will be needed to operate the port facilities.
Punta Colonet is Mexico’s attempt to claim a larger share of the billions of dollars in merchandise shipments between North America and Asia, which are coming through ports farther north. It is estimated that this aggressive project will cost close to $2 billion in its initial phase, with a final build-out estimate of up to $6 billion. Multiple sources of public and private monies will need to be accessed. Citicorp has been meeting with high-level Mexican officials to discuss participating in the financing of this project.
In the current world economic recession, many people question the timing for Punta Colonet. Previously, the capacity and the ability of the mature U.S. West Coast ports to handle increasing ocean cargo was a major concern, but the volume at the Los Angeles and Long Beach Ports has recently decreased by up to 30 percent because of the economic crisis, and the capacity issue has become less important. Many people, particularly players in the U.S. and California, are worried that bringing such a large port on line would further depress and dilute the ocean cargo business.
Punta Colonet has been designed to begin construction in 2012 or 2013, with completion around 2020, and had developed a strong momentum. However, in mid-January of this year, Mexico’s Secretary of Communications and Transportation Secretary, Luis Tellez, for the second time issued a postponement of the construction bidding process. At that point, it was announced that the global financial crisis had put the brakes on the project, but by the end of January the Mexican government announced it would begin administering the registration for proposals in April, with the actual process to accept these proposals scheduled for June.
Whatever the time frame, it appears that the Mexican government has decided to proceed with the Punta Colonet port. If the Santa Teresa region remains the preferred crossing point into the U.S. for this project, it could bring a slew of new economic development activities to the southern New Mexico-west Texas region (Paso del Norte region).
Now what is the first question that pops into your mind?? Citigroup gets bailout money, it’s share price drops to about $1, now they proclaim that they are profitable and the market soars on Tuesday, 3/10. I don’t know if all that is related to this port project, but you have to wonder at the very least: If the U.S. government is “funding” Citicorp, then does that mean the U.S. taxpayer will be building this port if the deal goes through??
Remember this story from just a couple of weeks ago?
NEW YORK/WASHINGTON (Reuters) – The U.S. government will boost its equity stake in Citigroup Inc to as much as 36 percent, bolstering the bank’s capital base in the latest emergency effort to save the banking giant.
While the latest rescue does not inject more money into Citigroup, it gives the government more of a voting stake and far greater influence over the bank’s operations, short of outright nationalization. The White House said a higher U.S. stake will help achieve a “better outcome” for the bank.
“The government is the new boss,” said Mike Holland, the founder of money manager Holland & Co in New York. “Every major decision is something that is not going to come out of Park Avenue, but is going to come from Washington, D.C.”
New York-based Citigroup in October and November received $45 billion of taxpayer money, as well as a government backstop to cap losses on $300.8 billion of toxic assets. More than two-thirds of these assets related to mortgages and commercial real estate.
Pandit has split Citigroup into two: Citicorp, which has retail banking and other businesses that Citigroup wants to keep, and Citi Holdings, which includes troubled or underperforming assets it wants to sell or wind down.
A higher government stake could complicate Citigroup’s ability to operate in some of the more than 100 countries where it has businesses. Bank executives downplayed speculation that Citigroup might shed all or part of its ownership of Grupo Financiero Banamex, Mexico’s second-largest bank.
“We’re not open to the idea of offloading assets that we really want to keep,” Edward “Ned” Kelly, head of global banking and Citi Alternative Investments, said in an interview. “Banamex is a very important property to us, and we are intent on retaining it and maximizing its value.”
(Here’s more analysis of the situation at Citigroup from John Batchelor at The Real Barack Obama blog.)
And here’s more background on Asian investors who are also wanting in. There has been a lot of behind-the scene negotiations and “intrigue” in lining up financial partners with political connections in Mexico, according to Pacheco. Here’s some background you might find interesting from The Free Trade Alliance based in San Antonio, Texas. From April, 6,2006:
A Deck of Chinese Cards
Mexican and US officials and businessmen are stepping up contacts with China and other Asian nations in high-stakes bids to expand economic relations. Trade missions from Baja California, Chihuahua, Michoacan and Texas all have recently flown to meetings and tours in the emerging global economic powerhouses of the Far East.
Their eyes fixated on the expanding Chinese star, Mexican officials are now considering opening an eastern-oriented Pacific port in Baja California to help handle the burgeoning trade volume. Located about 150 miles south of the US-Mexico border, Punta Colonet is emerging as a possible super port. Carlos Jauregui, the executive director of the port of Ensenada said construction of the port could begin in 2008 and be completed by 2012. Jauregui estimated the facility could cost about $5 billion dollars to build, including a rail link to the United States.
And what about the implications for U.S. ports?
The Cunningham Report, which describes itself as “an information source for the trade and transportation industry” commented on 89/31/08:
Although folks at both the Port of Los Angeles and the Port of Long Beach have downplayed the impact of the Punta Colonet project and noted that completion of the port would be years away, if it is developed, the Mexican port could at some point pose significant competition.
Also, from The Puget Sound Business Journal, August 29, 2008:
While Mexican planners hope the Mexican port will attract cargo from congested Southern California ports, that could have a domino effect in the Pacific Northwest.
The ports of Seattle and Tacoma are launching a joint marketing agreement to convince cargo owners to shift cargo from Southern California to Puget Sound, but that effort might have less success if Southern California congestion eases because of the Mexican port.
Otherwise the proposed Mexican port probably won’t take away too much cargo from Puget Sound ports, except for import cargo destined for Mid-Atlantic states, said Doug Coates, principal for TransSystems Corp. in San Francisco.
Puget Sound ports already are losing some cargo to the new Prince Rupert Port Authority in British Columbia, as well as to expanded East Coast ports including the Port of Savannah, Georgia. In July the Port of Savannah announced its volumes had increased 15 percent over the last year, while the Port of Seattle’s volume dropped 8 percent in the first half of this year.
The Portland Business Journal reports that Port of Portland officials “aren’t particularly worried about heightened competition,” but their article includes this tidbit:
Doug Coates, principal for TranSystems Corp. in San Francisco, said one attraction of the Punta Colonet port might be the promise of lower longshore labor rates, and the possibility that the Mexican port would be buffered from any labor issues with the International Longshore and Warehouse Union. While that union recently signed a new contract, owners of cargo plan far ahead to avoid the effects of union disturbances.
“The shippers are still worried about longshore unrest on the U.S. West Coast and what happens with agreements,” Coates said. “The carriers like the fact that it’s lower cost and more flexible labor.”
Do you hear the sound of American jobs going down the tubes as the new “community” here in North America takes shape?
By the way, RE/MAX Baja Realty is gearing up to sell property with the proposed port as a selling point and their contact form is already up and working:
Welcome to Baja California’s Official website for the largest Mexican public works project ever.
The purpose of Colonet Real Estate website is to bring information about the new project developing in Baja California, prices of all the possible property’s for sale and questions referring to Punta Colonet.
MAPS and More Information on Punta Colonet
More Background Information on Border Ties
Frontera Norte Sur, published by New Mexico State University (2006 edition) Section of interest:
Banks Leap Across Borders
Given the green light by the Federal Reserve Board, a Mexican bank has finalized its majority-ownership purchase of the Texas-based Inter National Bank (INB). Luis Pena Kegel, director general of the Banorte Financial Group, said the INB will use its base from the city of McAllen on the Texas-Mexico border to expand into other regions of the United States.
“With this operation, Banorte has the intention of getting closer to families and businesses on both sides of the border with innovative financial products that nobody else is offering,” Pena said in an interview with the Mexico City daily La Jornada.
Thanks to America Lassie for this link which has the video of the hearing mentioned by Kucinich on Greta:
NBC correspondent Lisa Myers investigates banking titans that made overseas loans in wake of congressional hearing.
BACKGROUND on Jerry Pacheco, ABQ Journal columnist
Press Release from the State of New Mexico re: Jerry Pacheco
Friday Jun 13, 2003
Pacheco Heads New Mexican Affairs and Trade Division
Contact: Cathy Ann Connelly: 505-476-3747
Santa Teresa, New Mexico – As part of Governor Bill Richardson’s efforts to improve commercial trade with Mexico, Jerry Pacheco, formerly deputy secretary for New Mexico Economic Development Department, is now director of the new Mexican Affairs and Trade Division. This office was created by the State Legislature to better oversee and coordinate the activities of the New Mexico Border Authority, New Mexico Economic Development Department, and the New Mexico-Chihuahua Commission.
Based in Santa Teresa, Pacheco believes the new office is a major, positive step toward increasing the trade and infrastructure interface with all Mexican states.
“State Senator Mary Kay Papen carried the bill that created this new entity, and it is one that will further our agenda of improving productive trade with Mexico,” said Pacheco.
New Mexico’s trade with Mexico is already a mainstay of the state’s existing economy to the tune of $106 million annually — particularly important in the southern part of the state. But although New Mexico shares a border with Mexico, the state is still ranked 39th out of all the states in the U.S. when it comes to its amount of business over the border.
Secy. of Defense Robert Gates Downplays Possible U.S. Role as Fears of Mexico Collapse Mount; Don’t Be Fooled, There’s A Bush-Era Agenda Still Going On Here…
Filed under: Current Politics | Tagged: "On the Record", Albuquerque Journal's Business Outlook, Banorte Financial Group - Mexico, Bill Richardson, Canada, Carlos Jauregui, China, Citi Alternative Investments, Citi Holdings, Citicorp, Citigroup, Citigroup retail business, Dennis Kucinich, Edward "Ned" Kelly, Frontera Norte Sur, Greta Van Susteren, Grupo Financiero Banamex, Inter National Bank (INB), International Longshore and Warehouse Union, Jerry Pacheco, John Batchelor, longhsore labor issues, Mexico, Mexico Secretary of Communications & Transportation Luis Tellez, New Mexico Border Authority, New Mexico Economic Development Department, New Mexico Mexican Affairs and Trade Division, New Mexico State University, New Mexico-Chihuahua Commissioin, North American Community, ocean cargo business, Paso del Norte (New Mexico-west Texas region), port of, port of Ensenada, port of Hong Kong, port of Long Beach, port of Los Angeles, port of Savannah Georgia, port of Seattle, port of Singapore, Portland Business Journal, Prince Rupert Port Authority - British Columbia, Punta Colonet, RBO, RE/MAX Baja Realty, Santa Teresa NM, shipping between North American & Asia, T.A.R.P. bailout, The Cunningham Report, The Free Trade Alliance - San Antonio Texas, The Puget Sound Business Journal, The Real Barack Obama blog, U.S. economy, U.S. financial crisis, US/Mexico Border Transportatioin Planning - FHWA | 14 Comments »