A Four-Star Tour of the World

In 2013, four-star general and former CIA director David Petraeus joined KKR to become chairman of the KKR Global Institute, an initiative meant to bring greater political and macroeconomic analysis to the investment firm’s activities.

In December, Privcap interviewed Petraeus alongside Vance Serchuk, the executive director of the Institute, to learn where they see opportunity in 2014.

NORTH AMERICA
Petraeus: “You have a market of roughly 500 million people. The demographics are good compared to those of say Japan, or China, which is facing a downturn. . . We have a number of other advantages: The manufacturing revolution, the IT revolution and the life sciences revolutions are also endeavors in which the United States and North America at large are in the lead. So the prospects are quite good.”

Serchuk: “In the West most countries got rich before they got old. For the Chinese the danger is that they’re going to get old be- fore they get rich. Because the average age in the United States is going to stay lower, that’s actually a huge advantage.”

MEXICO

Petraeus: “Following ten years of double-digit increases in the cost of labor in China, Mexican labor is now only a bit more expensive than Chinese labor.”

Serchuk: “Remember the political reforms have made progress but they’re not done yet. . . Exactly what will the parameters of energy reform itself be? Still very much open to question.”

EUROPE
Serchuk: “What’s so striking is that you can see the extraordinary, magnetic, attractive power of the European Union on the eastern periphery. KKR just did the largest-ever private equity deal in Serbia. The story in Serbia is of courageous decisions on the part of political leadership there to confront difficult issues so that they can move forward towards the EU.”

JAPAN
Petraeus: “The challenges now are carrying through the meaningful reforms in the labor sector with the agriculture economy…while still retaining the support of the people. But recognizing that, [Abe] has an opportunity that no other prime minister has had in recent decades, and there are several years without another election.”

Serchuk: “Tensions and the concern about China. . . has spurred a greater willingness to contemplate otherwise really, really unthinkable reforms.”

THE MIDDLE EAST
Petraeus: “Saudi Arabia, Qatar, the UAE, Kuwait, Bahrain, Jordan, Morocco. . . in each of these countries there have been far more reforms than I think most people recognize.You have to understand the culture. You have to understand the conflicting tensions in these countries to appreciate how much, say, King Abdullah in Saudi Arabia has really done in a state where there is a lot of conservative sentiment.”