LATIN AMERICA AND EUROPE:

OPPORTUNITIES AND CHALLENGES FOR GREATER INTER-REGIONALISM

For two decades, EUROPEAN governments largely ignored LATIN AMERICA. Disinterest for the region grew in the 1990s when attention became focused on rebuilding and integrating EASTERN EUROPE. General disregard continued at the turn of the century, despite LATIN AMERICA’S booming economic growth.

However, since the beginning of 2013, things appear to be changing in the international arena. At the end of January, the First EUROPEAN UNION – LATIN AMERICAN and CARIBBEAN (EU – CELAC) Summit took place in CHILE. It gathered the EU’s 27 and LATIN AMERICA’S 33 countries with the objective of creating a “strategic alliance for sustainable development”.

Important political figures were present during the meeting, including José Manuel Barroso, President of the EUROPEAN COMMISSION, Hermann Van Rompuy, President of the EUROPEAN COUNCIL and GERMAN Chancellor, Angela Merkel. The quality of the attendants alone seems to highlight the importance the region is taking for EUROPE. In addition, Merkel herself stated that LATIN AMERICA had the potential to help redress EUROPEAN countries in distress, in particular SPAIN and PORTUGAL.

Later, in mid-February, the LATIN AMERICAN Development Bank (CAF) and the prestigious school of government in Paris, Sciences Po, organized a Conference on EU-LATIN AMERICAN inter-regional relations. Renowned political, economic and academic figures from both regions were present to discuss the opportunities and challenges of greater interdependence. These offered important insights on the issues at stake and the viability of a strategic alliance.

INTER-REGIONAL COOPERATION IS HIGHLY DESIRABLE 

First, all participants agreed that EUROPE and LATIN AMERICA’S common history, culture and values were a strong basis on which to develop positive inter-regional relations.

Second, according to Enrique Iglesias, IBERO-AMERICAN Secretary General (SEGIB), EUROPE’S past role as a socio-political, economic and integration model also facilitated collaboration between the two regions.

Admittedly, this model has proven to be ridden with imperfections as a result of the crisis affecting the EUROZONE and put the EU’s prime position in doubt.

However, according to Enrique Garcia, CAF Executive President, the current situation in EUROPE provides the opportunity to diversify LATIN AMERICA’S economic relations.  If EUROPEAN countries and the EU reach out to foreign markets to stimulate growth, LATIN AMERICAN countries should see this as an incentive to increase bilateral and inter-regional relations.

CONSIDERABLE NEED FOR INVESTMENT IN INFRASTRUCTURE, HUMAN CAPITAL AND TECHNOLOGY

In fact, while the LATIN AMERICAN region as a whole has experienced an average 4% to 5% growth since 2007, for Iglesias, governments should be cautious about “Latinoptimism”. Macroeconomic fundamentals and debt have been controlled, poverty has been reduced, but considerable challenges remain.

Most countries still have a considerable need for investment in infrastructure, human capital and technology. With an economy three times the size of LATIN AMERICA and an advanced degree of development, EUROPE’S funds and skills remain highly attractive. EUROPEAN and LATIN AMERICAN development funds, government representatives and businessmen all agreed on this.

As Juan Carlos Echeverry, former Minister for the Economy of COLOMBIA put it, LATIN AMERICA also suffers from political tensions, but these can be tamed by continued growth. While countries such as BRAZIL have done an impressive job expanding the domestic market to absorb the shock of the US and EU crises, external markets will have to be reinvigorated to sustain and strengthen these rates of growth.

Hence, during the conference, many stressed that private sector initiative is crucial to foster business agreements and associations in the two regions. For Donato di Santo, an ITALIAN diplomat, in the past two years, small and medium ITALIAN enterprises in BRAZIL have increased from 200 to 800, benefitting parties on both sides of the Atlantic. However, for Iglesias and Di Santo, government intervention and political decisions to bolster inter-regional cooperation is also urgently needed.

INTRA- AND INTER-REGIONAL TENSIONS HINDER SUSTAINABLE COOPERATION

However, interregional cooperation suffers from a certain number of tensions. For Yves Saint –Geours, former FRENCH Ambassador to BRAZIL, Juan Gabriel Valdés, former Minister of Foreign Relations in CHILE and Ernesto Talvi, academic director of the Center for the Study of Economic and Social Affairs (CERES) in URUGUAY, inter-regionalism is difficult because there is not a united region for the EU to negotiate with.

Not surprising when we see the myriads of regional organizations in the AMERICAS. Since the 1990s, there have been the NAFTA, MERCOSUR, CAN and SICA, to name just a few. In recent years, we’ve seen the emergence of ALBA, UNASUR and most recently, the Pacific Alliance.

These have effectively resulted in fragmenting rather than deepening regional integration. Differences in countries’ visions about regional integration and international relations, as well as competition between these visions have proved to be a further obstacle in creating a coherent regional stance for effective inter-regional cooperation.

Linked to this phenomenon, for Mario Pezzini, Director of the OECD Development Centre, differences in needs and demands on either side of the Atlantic limit greater inter-regionalism.

BRAZIL AND ARGENTINA HAVE INCREASED PROTECTIONIST MEASURES, WHICH GO AGAINST THE EU’S POLICY GOALS

For instance, the EU is seeking to stimulate global demand and re-establish confidence in the Eurozone. Hence, it is aiming to increase access to secure and profitable external markets through free trade agreements, while maintaining EU agricultural subsidies.  However, LATIN AMERICAN countries want to stimulate the domestic demand and achieve sustainable growth. To do so, countries such as BRAZIL and ARGENTINA have increased protectionist measures, which go against the EU’s policy goals.

Moreover, there is the fear that EUROPEAN interests will continue to be driven by energy needs. Consequently, the exploitation of natural resources risks deepening the primarization of the LATIN AMERICAN economy, leading to growth, but not development.

To conclude, the beginning of 2013 has been subject to a number of important moves aimed at extending and deepening EURO-LATIN AMERICAN relations. As former AUSTRIAN Foreign Minister and European Commissioner Benita Ferrero-Waldner put it, the EU-ECLAC was a “very, very important summit”, which marked the change towards a more equal and symmetrical relationship between the two regions. The Second Sciences Po-CAF conference equally marked the growing importance given to EU-ECLAC relations.

Notwithstanding the advantages that could be reaped on both sides from greater inter-regionalism, a number of important hurdles need to be overcome. Achieving greater intra-regional cohesion and inter-regional cooperation are some of them and clearly not the easiest ones. It seems that beyond political will, effective negotiations to reach common, viable and sustainable policies will be needed in the next few months. It is highly doubtful that we will see integral and effective inter-regionalism any time soon, but hopefully, concrete measures in that direction will be put into action.

By Charlotte Serres