 I'm Jay Fidel. This is Think Tech Hawaii. We're talking about Latin American directions here today. And I'm stepping in for Nicholas Sussman-Haran. And we have our guest Juan Pabotello. He is from Columbia. He is in Columbia. You're in Bogota right now, I guess, huh? Yes, Jay. I'm in Bogota currently. So tell us who you are. Tell us why you're connected with the title of our show, Infrastructure and the Infrastructure Gap in Columbia. So, well, first of all, my name is Juan Pabotello. I'm a young associate. I'm curious and passionate about bettering things around me, changing and making my efforts worth. So I'm a lawyer. I'm currently dedicated and working on a firm, especially in the banking and finance sector, specifically in the project finance area of the firm, which means I currently work with a lot of projects that can change the country and that can offer no infrastructure to its citizens. So that's a little bit about me, Jay. Well, it's very, I mean, I'm looking forward to a discussion with you that helps us understand what is happening in the United States. And I remember the Secretary of Energy, I guess it was during the Reagan period or right after the Reagan period in the United States was a fellow named Spencer Abram. And there was a big blackout in the northeast part of the country. And they said, what's wrong with you? How come, you know, we had the blackout, you know, the Secretary of Energy. He said, maybe you forgot, you have to maintain grids. You can't just build it and leave them there forever. They do not maintain themselves. And the country hasn't paid attention to the grid in decades. So this is what happens. Infrastructure is a very special animal. And I think, you know, the United States hasn't really learned that yet, even with Biden is such an effort to pass the infrastructure legislation and funding. It ought to be a middle name infrastructure. So what are the problems in Columbia? I know we can learn from you. So, Jay, it's similar to the United States in the sense that when you go back in history to infrastructure investment, back in the 20s and 30s, Columbia actually invested a huge part of its GDP in developing it. I guess it was part of the modernization that the whole world was trying to live and trying to jump in that train. But just as in the States, currently Columbia has a huge gap precisely in transport, energetic needs, hospitals, and access to roads in most of the country. So if you wanna see it, the one of the main issues of Columbia is its geography. I guess it can be comparable to the States in the sense that the US is a huge territory, vast plains, and then you have to maintain all that energetic grid. It takes a lot of money, it takes a lot of a force to do that, right? In the case of Columbia, we can have a similar to there in a sense that Columbia has a complicated geography. It's a country about two times the size of Texas and you have three mountain ranges across over it. In that sense, it's difficult to develop the necessary infrastructure to bring to your cities is public services, from roads to water, electricity. In every sense, our geography has complicated the development of the country. It even relates to a conflict in a sense that if you don't have roads to get to people, then the state is not present in any way. So then you have the surges of part of the states that have controlled certain parts of the country for the last 40 or 30 years. Fortunately, we're trying to change that. It's been 20 years that we have been investing in infrastructure. We hope for more ambitious plans, just as you were saying, it's complicated to get the funding, especially in a country like Latin America, it does not depend so much on politics like in the US, but rather in trust and how can we make sure investors feel safe to invest in the country, get their returns, and then we get the infrastructure we need. So in a nutshell, it's geography, lack of funding, and then how do we do that? How do we make that happen? Well, I have so many questions for you. First thing is, you know, and Nicola Susman and I have discussed this, is one of the remarkable things in the world that we live in, is that Latin America is so many fragmented countries, so many dictatorships and the autocratic situations, the democracies we had hoped for, we all of us, you know, the pan-American view of things that hoped for really haven't come true. Actually, Columbia is one of the exceptions where you have a certain amount of democracy. You have to work for it. You know that, you know? That's true. You have worked for it. But if I, you know, if I get in my car at the border between the United States and Mexico, and I say, I think I'm gonna go to Tierra del Tuego now, I'm gonna drive all the way down. I say to you, lots of luck, because there isn't a pan-American highway. There's no assurance that you will be able to, you know, cross the mountains or the plains or, you know, get through. And there's no trains to take me north and south or east and west across borders. And so, you know, as you say, you need to have infrastructure, at least in the way of highways, but we're also in, you know, broadband and electricity and what have you. And it isn't there yet. And it could be a very important factor in bringing Latin America together, which Latin America needs to do. Someday, some fellow like you won, will emerge as the leader of Latin America. That's what I hope for, not just Colombia, but everywhere, you know. I mean, thanks for the compliment, Jaydan. I do agree with you. And in a sense, just talking about the pan-American highway, the gap that actually is not linked together is in a place called the Darien Gap. The Darien, it's a jungle that sits between Panama and Colombia, which is really, really, really dense. It's actually one of the most dangerous places in the country because you have a lot of immigrants crossing, trying to go from South America up to the States. And then, of course, there's a lot of natural resources there, but when you go to example, I want to go back to your example because I think it exemplifies why do we need to close that gap. And it's the fact that even though there might be roads that connect, you know, the States until Tierra del Fuego in Argentina, you're not sure if it's safe to go that way. You're not sure if the conditions of the roads are going to be fine for you to transit on them. And then if you're not able to do that, nor are the government officials, nor are the security forces of each state. So for me as a Latin America, as a Latin American, it's really interesting to see how other countries in the developed world, let's call it the global North, you know, they focus on different social issues, but in Colombia, you kind of have to go back to basics. You can be in Bogota, which is a place that has everything. You have top-notch internet, top-notch electricity, everything's fine, just like another place in the world, right? But once you drive six hours away from Bogota, you're in a different planet. So I guess we all need it and for Latin America to, you know, join together and to actually prosper and escape that middle income trap that most of our countries are in, I guess it's mandatory to have that link between us. Not even just in roads, but let's talk about networks. Let's talk about electricity. Let's talk about airport infrastructure. It is important too. I mean, if you see as Latin America as a continent, let's say so from Mexico to the South, it's a huge portion of the earth that lacks the connection necessary to make those countries economies, prosperous and competitive in the world. So I guess, yes, for us, it's fundamental. But when it goes to changing it, I guess we have certain structures that we can apply that have been working in these countries and that are actually changing things that governments are not, you know, prone to do or that do not have incentives to do. I don't know if you want to go into that. Well, I do, I do. But first I want to make the comparison you were talking about. So, you know, in South America, as in Africa, these countries are underdeveloped in terms of infrastructure, clearly. I remember learning, and I think it's an important lesson and you can learn it from any academic anywhere, is that if you have cheap electricity, you have a better economy. If you make access to electricity available everywhere in the country, the better economy goes everywhere in the country. It's that simple. It's, you know, it'll find a way to the electricity. And the same thing with transportation. So if you look at Japan, you know, Japan is fluid. People go from one end of Japan to the other end of Japan all day long. They go on trains because the trains are very good and very fast and on time and clean and cheap and all that sort of fabulous. But it brings the country together. It makes the country an economic unit. If you go to China, China is focusing on this too. It has speed trains from one end of the country to the other. It's all available, as you say, for commerce, for electricity, for security forces. They focus a lot on security forces in China. But the point is it brings the country together, makes the country more effective and it supports centralized government, which may not be a good thing morally, but in terms of the economy, it's good to have centralization, I think. In Europe, it's not so clear, but, you know, in Europe, you know, there's a lot of cross-border activity and of course they're very aware of energy and roads and airports and all that. So what you have, you know, what did you call it, the Great North? In these countries and continents where there is infrastructure, they're much better off. And it's almost like if you were gonna make a sequence of priorities, you would say, well, let's see, when do we begin? What's first base? Well, you know, for Bogota, for Columbia, for so many countries in South America, first base would be exactly what you're talking about. The only infrastructure connected country with itself, with its human resources and with its natural resources, which are valuable. And in order to be extracted, you have to reach them and so forth. In order to make it safe, you have to bring security. It's all very clear what you're saying. So what I get though, and this is what we should spend a little time on, is how you do that, how you do that in Columbia or elsewhere. And one of the things you mentioned, I think it's worth pursuing is this public-private partnership arrangement and the benefit of having investors earn a return. So, big question. I'm an investor. How do I earn a return on a road? In Columbia. Well, Jay, that's precisely what I do in my day-to-day. So it's a topic I'm really passionate about because it's actually changing that gap and it's actually putting a little scent of grain to change the situation in the country. So the first thing we have to understand is that investment and developing infrastructure changed in time in Columbia. It used to be a lot of public participation. In the last 20 years, Columbia has opened itself to the economy and to the world. And it's a big part of why the country has changed why we achieved the peace process we did a couple of years ago. And what happens is you give the opportunity to private investors to cover the gaps that the government is not able or does not have an incentive to do so, right? And how it works is these private investors look for financing either in multilateral banks, local banks, international banks to finance the projects. And then the cash flows of the projects are the ones that repay the loans and therefore repay the sponsors and the investors. So that's in a nutshell how project finance works in Columbia and most of the work it does. But what has happened is the government realized that Columbia was a good investment and they are selling it to the world. Most of the private public partnerships we have in airports, roads, seaports. Right now the government is focusing a lot on railroads, especially in Bogota. They are building the first metro line of Bogota despite having a huge PRT system. It's not enough, it's a huge city. How big a city is it? Wow. What's the population? So last time I checked Jay, it was about 11, 12 million people. So it's huge. And then the government realized it was profitable, Columbia was a good investment. And what they do is they sell this to investors, they come here to invest and they get the cash flows of the project. And that's in a nutshell how we do it. So yes, it's kind of an interesting word. I don't know if you have any... Yeah, no, but I think what you're talking about is you have to monetize all these things. If you wanna have a road and an investor pay for the road, you gotta find a way to collect a toll on the road or have some way of earning the money so as to pay the investor off. On the other hand, you could regionalize this and say to the investor, look, we need infrastructure in this province. And that includes airports, it includes rail, it includes roads. And so the roads may not make money by themselves, but if you put them in the same basket as the railroads and the airports, then what you earn on the railroads and the airports can help the investor to recover his investment on the roads too. Exactly. So go ahead. Yeah, sorry, Jay, I just wanted to compliment on that because I think it's really important. So it actually has gone in stages. The first thing that the government has started to do with private partnerships, what's roads? You need roads to get to the first places, right? And then they made a huge investment. It's been like 10 or 12 years. It's almost $18,000 million. That's the 4G projects. And then now they are looking for the fifth generation projects. They call it the 5G projects. And it's focusing precisely on railroads and then all the additional things that can connect the country better and make it more competitive. But it's step by step. You first need roads, then you need to connect these roads to seaports and seaports to airports. And that's how it goes. Colombia, surprisingly, has a great network of airports because of our mountains. So it's a thing we have covered, but we're working on the rest. So go ahead, excuse me. Where does the money come from? I guess I'm going to assume from what you said, the money does not come from the government. The permissions come from the government. The incentives come from the government. But the actual investment comes from somewhere else. Maybe bonds, where does it come from? So it actually depends on a case by case scenario on the project. But to make it a broad thing and have categories on it, you have private investors, let's say they are really prone to invest on hospitals, on schools, on public services, because the utilities companies usually have a stable cash flow because you need water, you need electricity. So private investors are really fond of these kind of projects. They usually can be investment funds from all around the world with big wallets. You can have institutional investors such as pension funds from different countries they like to invest in energy. They look for projects that have a stable cash flow. That's energy, that's the safest one you can go to. And then you have transportation projects or even network projects. So in transportation projects, you have a mix of both. So the government can participate in the project by issuing bonds, we have done that before, or by just simply giving public debt to the project with the condition that private investors such as multilateral banks or international and local banks put the rest of the money. So it's a mix and these kind of structures what they look for is to minimize risk and to make it profitable. So in a sense, you have different industries, really stable ones like energy, let's call it medium ones like toll roads, railroads, the metro system in Bogota. And then you have riskier investments in networks or acquisition, financing companies in Colombia. You have a little bit of everything but those are the players that invest in the country. I have so many questions yet. We should plan to spend about six hours here. So how do you prevent situations where the investors are goosing the system for too much profit? How do you regulate them so they don't rip the local economy off? So then again, it depends to what sector the project is in. If you go to the energy sector, which is one of the more sensible ones because the population itself is the one sustaining the system, paying the bills every month. In Colombia, the energetic market is a regular, it's regulated, it's centralized. So actually the government can manage how the things are priced and how much money the investors get. So we don't have cases like what happened in Argentina a couple of years ago that you have a fully privatized market full of investors and then investors just raising the tariffs, then you have the government rejecting those races and then you have a political and economical problem. In Colombia, the energy market is centralized and it's regulated and therefore the government can have a say in how much you can raise things or not. And it's even planned in the project. So when you have, let's say a thermoelectrical plant or a solar powered plant in the country, investors know how much they are gonna get from the zero until the project ends 45 years after. So that's one way. You know, we talked before about, you know, the maintenance of the infrastructure and my story about the Northeast, part of the United States energy grid, nobody paid attention. And, you know, that's the case with the rivers and rather the bridges which we saw a bridge failed just the other day where Joe Biden was there in that city and the bridge failed right there. And then it's really interesting, made a point. But there's all kinds of infrastructure in this country that are failing that have failed because there's no plan. There's no plan to either make the sequence that you talked about, you know, first the roads and the railroads and the hospitals, so forth. There's a sequence and it's complicated. I mean, you need a computer to figure out maybe you need artificial intelligence to figure out which one goes first. But anyway, and how you follow up but my big question is does the system you're describing with funding infrastructure, public-private partnerships, certain amount of government regulation, does that also wrap around the notion of maintaining it? Because the worst thing you can do is build it and then turn your back on it. Yes, it does. Actually, I mentioned before that these structures are prepared to balance risk between different players, right? So what you do is of course you have the construction of the project and then it starts giving you profits and then those profits are also given or adjudicated, let's say, granted to someone who's in charge of the maintenance and then that maintenance has certain standards. So when you have one of these projects, Jay, you just not hire someone to build it but someone to maintain it for the next 30 or 40 years depending on the project. And then what happens is the government lets you do the project, lets you get the profits but also makes you abide by certain regulations and certain standards. And then if they don't abide by it, then you have an event of default in those contracts and then all the legal remedies that are available to the government or to the project company are gonna be there for them to make them abide to the contract. But in the end, yes, what these structures foresee is not just constructing and building the infrastructure but maintaining it in the long term. If you don't have any maintenance and you're gonna have things such as the one you just mentioned. I mean, when you think about the United States and if it's infrastructure, I mean, it's clear it's a huge country, the costs must be gigantic compared to the ones we're managing here but for sure it's foreseen in the structures, Jay. Yeah. Well, I also think of China. I mean, I think China is always an interesting comparison. China went into Brazil, for example and got control of iron ore in the western part of Brazil and built steel factories and the like and they got good prices on the idea. I think they minded themselves and they're taking advantage of the resources. China is everywhere. And I've heard that Russia is also coming into Latin America with similar arrangements and China, you worry about China because of the debt trap arrangements where they lend money to a given local government that can never afford to repay them. It doesn't pencil out and yet the government maybe because of corruption or otherwise, they do that deal and China winds up owning the port and controlling commerce in and out of the country. And so you run the risk of what I wanna call it modern day global colonialism, economic colonialism. And we cannot have that. That's really backward stuff that's going back into the 19th century is what it is. So query, are you concerned about that? Is Columbia concerned about that? And how do you protect against the debt trap kind of scenario that I described? So the first thing we have to take into account regarding Columbia and international investors that's counting countries, international credit agencies, whatever investors wants to come here is Columbia is a responsible country. Columbia, unlike most of Latin America has always paid its debts. It's one of the few exceptions in the subcontinent to call it like that. So the Colombian government, when it goes to public debt is quite responsible. They always paid and they avoided and precisely because we're talking about developing infrastructure with private investors we don't have that institutional reach or let's say that institutional involvement of third parties or other governments in Columbia. I guess colonialism is a huge question especially coming and is a huge question for me as a Colombian and as a lawyer precisely because Latin America has been in a certain way subject to different big and huge empires throughout the ages. But I guess the way we're trying to do it is not getting into those debt traps because we don't need institutional investors to come directly to the country. We have the credibility, we have the cash flows, we have an attractive country for investors. And then I guess this situation is different. When I think about China and about the debt trap I think of Africa, those countries that get huge stadiums, huge railroads that they can clearly not pay. That's not the case of Columbia. We can see that maybe in other countries of the subcontinent, but we are responsible. We know what we have. We know we are attractive for investors and we try to keep our mind sound and our economy working. Yeah, well, it sounds like you're doing very well. It's not Columbia made peace with the FARC. That was good. That was a sign of stability and democracy if you wish. And what you're doing now is not only good internally but it's good as a brand. It's good as an international statement to draw investors from Wall Street and everywhere else. So how would you characterize the success of this operation? As soon as you talk to a lawyer like you who is actually involved in business deals with a private public partnership, you say, hey, this is pretty serious. This is actually working. People are going to the trouble of having a rule of law, a rule of law that draws investors. So how successful is it in your view? So Jay, like everything, I think there's opportunities to make it even better and to make the projects perform better. There's still an issue with corruption in regional entities of Columbia. So that's something we have to address definitely. But I guess the results are better in the last 20 years and just focusing on the economic part of Columbia, on the economic side. We still have a lot of social issues to address. That's clear to me. But economically, it has been growing. It has been changing. And I think we're doing a formula that works. I hope that this formula can help us escape the middle income trap in which we might get caught just as Mexico and Brazil did. But I guess what we need to do is governments and public policies that are conscious of the importance of infrastructure behind any political consideration. Because one thing that is really transversal to all Latin American countries is political variability, right? So you have another government that thinks differently and then they change everything. That's the worst thing you can do for this kind of project. So I think it works. I think it still needs to get another, a few not just to make it better, but definitely is helping us and has helped us. And hopefully if we get responsible governments in the future, we can get a country that despite its political ideology, despite whatever the next government thinks can thrive and give its citizens the access to safety, public services, education, and all the things we need to be a prosperous nation. Yeah, well, we can learn a few things from you. We can learn about infrastructure. We can also learn about stability. Speaking of stability, I have to ask, Columbia, a lot of people associate Columbia with drug cartels. It's been profitable for a certain limited number of people. Would those people be involved in the corruption you're talking about? Would those people be investors in public-private partnerships? Where do they play? Where do they play at all of this? Ever meet them? Ever see them? Ever hear about them? What? So it's actually a question, Jay, that it's really interesting. Darker traffic and all the things around it have, of course, permeated every aspect of each Colombian life, each Colombian's life since 50 years ago. So I guess we have to understand that right now it's not like in the 80s or 70s when the darker traffic structure was centralized in big entities like cartels. You can have the unfortunate example of Paolo's co-art. He commanded the whole chain of production to get it to the states and sell it, right? Right now, it's a regional phenomenon. So you actually don't get those huge cartels like before that control all the chain of the production of drugs and even delivery to other countries, but it's regionalized and it's spread all around the region. So it's more difficult to attack in a sense that you don't have one central organization that's commanding it, but multiples nuclei around the region that do little steps of the chain. So how do they play in the projects? Fortunately, not a big role. They are not usually part of the projects. Actually, the projects try to get away from anyone or any fund that has been fruit or that has been related to any illegal activity. It's one of the things that can actually trigger an event of the fold and paralyze the whole project. But it's an issue we can address, but I'm firmly convinced that if we get votes, if we get water, if we get education to those places where those nuclei of narcotraffic still exist, people's gonna change because it's gonna be more profitable to have different activities to, if you were a farmer to do different things than to produce cocaine or coke in order to get that product. So they play a part in the sense that they can change the safety of certain regions of the country, but as soon as you get infrastructure there, things start changing. One of the examples you can see of that in the late projects of infrastructure in Colombia is in the north of the country. Once you get electricity flowing in La Guajira, which is up north in Colombia, it's a desert, things change because now you have people that have access to light, that means access to communication, that means access to businesses, to the internet itself. And then you change the dynamic of those places. So hopefully every time they play less of an important role, but yeah, they are still there and we're trying to address those issues too, Jay. Great, I'm very impressed with Colombia and the people in Colombia that I've talked to, I've talked to a few of them through Project Expedite Justice as you must know. But one thing I wanna ask sort of my last question to you is sort of a comparison, a comparative analysis because we hear stories about other countries, Venezuela comes to mind immediately, but there are other countries too that are not only impassable, but stuck under autocracy. They don't have a clue about democracy, they lost democracy and there doesn't seem to be any immediate opportunity to regain it. We're talking about countries that where the economies are in the sink and there doesn't seem to be any mechanism to regain it. How does Colombia compare? What's, let me put it this way, what's at the bottom of the heap? Who's really having trouble with infrastructure and all the good things that follow it? If you think about like Venezuela is a perfect example. Venezuela is not only a brother country to Colombia in a historical and social way, but it's like two twins separated from birth. They just decided to go different ways. Venezuela is the example of how economic crisis, how totalitarianism and authoritarianism can demolish what has been built. Venezuela was one of the examples of Latin America back in the 50s regarding infrastructure. Even today, if you go there, they have great roads. Some of them lack maintenance, but as of today, one of the things that is changing various people do not have a reliable access to electricity or drinkable water. So it's funny because you get to see Colombia and Venezuela as two examples of different things regarding infrastructure, also politically and socially. But if we go to what's wrong and what's damaging right now or what's a country that lacks, let's say that that striveness or that will to change this infrastructure is Venezuela. It's a country that is, it's infrastructure. It's just falling apart with the years and hopefully in the next years, if we get a change, we get a democratic government, we could hopefully change that too, but there would be the antithesis of what's happening in Colombia right now. Very interesting. So if I made you the president of the Organization of American States, we don't talk about that much. I don't think it's very vital these days, but let's assume there was a vital Organization of American States and I made you the president just for a day. And I said, look, the United States has issues around infrastructure. The United States has issues about stability for that matter and democracy. So, and I asked you, I said, I say, Juan, what's your advice? What's your advice as somebody who's close up to this, being part of a really creative and effective solution in Colombia? What's your advice to the United States? The first thing I'll say as a president of that organization would be, Jay, first understand your country. I feel the US has a lot of potential for me. It's an example of certain good things and other bad things, but I think they have to invest on themselves. And investing on themselves does not mean just creating manufacturing jobs because people claim that in the States. I mean, it's part of what has changed politically in the country with all the lack of, blue collar works that are being lost in the States, right? But my advice will be, vote, read, inform yourselves because the US is an example of what media can do to citizens and what media and the fake news can do to democracy. It's a country that has a lot of potential, has the biggest wallet in the world that could change in a few spams of years. If the US wanted to invest in speed trains, it could do it in the span of two years. It won't take them 20 or 40, like it would be to us, but just look at yourself and realize the potential you have. For me, it's kind of astonishing when you put examples like, such as Japan or you go to Germany to the Netherlands and you see the trains, you see all the public transportation systems that they have, they work great. And then you go to the US and besides some big cities in the coasts, the rest lacks complete access to public transportation. It's everything to be for cars. So I guess just look at yourself in the mirror, understand the potential you have, look at your wallet, and then invest in things that are sustainable and that can be better for your citizens. That would be the advice. One, we need you in the United States Senate. That's what I mean. One Pablo Tello, a lawyer in Bogota, Colombia, telling us about infrastructure and filling in the infrastructure gap, not only in Colombia, but elsewhere. Thank you so much, Juan. Thank you, Jay, for your invitation. It was a pleasure talking to you and I hope we can have this opportunity again. Thank you. I hope too. Aloha.