After years of hardly paying attention to Latin America and the Caribbean, the European Union (EU) once again looks to the other side of the Atlantic. Europe wants to promote its strategic autonomy and its relationship with the countries of the Community of Latin American and Caribbean States (CELAC) is essential to achieve this due to the resources it offers (critical raw materials, an enormous development of renewable energies…). But to forge these alliances, the EU will have to overcome a series of difficulties and fulfill its to-do list with the region.
Invasion of Ukraine: between neutrality and support for Moscow
The 33 States that make up CELAC have adopted very different positions regarding the Russian invasion of Ukraine. Most have preferred to maintain a neutral position: they are in favor of peace, but they do not apply sanctions against Russia or support the shipment of arms to kyiv. Among them are Brazil, Mexico, Argentina and Colombia. The Kremlin also has allies in the region such as Bolivia, Cuba, El Salvador, Nicaragua and Venezuela, to whom it sends humanitarian, technical and military aid in exchange for their support.
At the EU-CELAC summit, held this week in Brussels, Latin American and Caribbean leaders avoided an explicit condemnation of the war in Ukraine and any mention of Moscow. In a measured statement, they limited themselves to defending the importance of diplomatic efforts to achieve peace and lamented the “immense suffering” that the conflict is causing around the world.
The Brazilian president, Luiz Inácio Lula da Silva, and the Bolivian leader, Luis Arce, asked the EU and the United States to put an end to the “arms race” – in reference to the military aid given to Kiev. In addition, Cuba, Nicaragua and Venezuela showed their reservations from the beginning about the language of the document, which went ahead without the support of the government of Daniel Ortega.
China: Political Ties and Trillions in Loans
In the last twenty years, the Asian giant has strengthened its diplomatic relations with the CELAC countries, especially through the forum they have shared since 2016 and with their participation in the Asia-Pacific Economic Cooperation table. President Xi Jinping has visited the region eleven times since he took office.
And Chinese power is not just political. Between 2020 and 2022, Beijing has provided trillions of euros in development loans to public companies and Latin American governments. According to data from Boston University, the States that have received the most money from the Asian giant have been Venezuela (with close to 54,000 million euros), Brazil (28,000), Ecuador (16,500) and Argentina (15,300).
Latin America has also increased its trade with China in recent years, reaching 289,000 million euros in 2020. The Asian country also has free trade agreements with Peru, Costa Rica and Chile; while the agreements with Uruguay and Ecuador are in the process of negotiations.
Trade: Mercosur and the agreements with Chile and Mexico
The EU has important commercial interests in Latin America and the Caribbean. And in the aftermath of the war in Ukraine, efforts to conclude its free trade agreements with the region have increased. For the European economy it is essential to renew the treaties with Chile and Mexico; and unblock the pact with Mercosur (Argentina, Brazil, Paraguay, Uruguay and Venezuela).
After reaching an agreement in principle with Chile in December, the two parties must accelerate the procedures so that it enters into force in 2024. In the case of Mexico, the legal proposal is still pending the final approval of the Executive of Obrador, so it is not clear if it will conclude in time for the current legislature of the European Parliament.
The unblocking of the agreement with Mercosur seems more complicated. For now, the two proposals are far removed from each other and contacts will need to be accelerated to find common ground. The presence of Lula da Silva at the head of Brazil gives hope to the EU, since the president considers this association a “priority”. The president of the European Commission, Ursula von der Leyen, hopes to reach an agreement by the end of the year, but first she must overcome the drawbacks of France, which asks that all Latin American products be subject to the same environmental standards as European ones. The Brazilian leader, for his part, has assured that these demands hide “protectionist interests.”
European investments: green transition and minerals
Despite China’s large outlays, the EU remains the main investor in CELAC countries, with a total investment of 693 billion euros. To this amount must be added another 45,000 million that Brussels has committed to promote sustainable development, placing special emphasis on the preservation of biodiversity and the fight against climate change.
Within this strategy are the connection between the EU and Latin America with a 6,000 kilometer fiber optic cable and the development of an industry based on the value chain of minerals. Latin governments want to have greater decision-making power over European investments and distance themselves from their “merely extractivist” image, promoting this sector. Europe is also interested in this development, since China monopolizes a large part of markets such as semiconductors.