European Geostrategy

0:11, 20 October 2009

By Guy Edwards and Enrique Mendizabal

In May 2010, while Spain holds the Presidency of the European Union (EU), the Sixth EU and Latin America and the Caribbean (LAC) Summit takes place in Madrid. The EU-LAC Strategic Partnership has achieved little and risks becoming obsolete. Spain and the European Commission (EC) may have led the EU’s policy in LAC, but given existing and emerging challenges, the entire EU needs to invest its energies into reviving the relationship.

A successful EU-LAC partnership has vital strategic potential for reforming multilateral organisations, forging a new climate change agreement, fighting narco-trafficking, reasserting economic interdependence and advancing the Doha Round.

The relationship between both regions did not remerge significantly until the 1990s as interest in political dialogue, cooperation, and trade gathered momentum. Attempts to complete Association Agreements between the EU and LAC sub-regional bodies were the key focus of the EU. Yet, slow progress in Latin America and more urgent issues in Asia, Africa and the Middle East, have challenged Europe’s commitment. The absence of the French, Italian and British leaders at the 2008 Summit in Peru did not go unnoticed by Latin Americans.

Will 2010 mark a turning point?

The presence of Argentina, Brazil and Mexico at the G20 Summits in addition to the EU-LAC and Ibero-American Summits, Euro-Latin American Parliamentary Assembly and the EU’s strategic partnerships with Chile, Brazil and Mexico demonstrates not only the complexity of the relationship and its potential, but also the stronger presence of Latin American on the world stage.

European countries constitute the largest source of Foreign Direct Investment (FDI) in Latin America. Latin American corporations have increasingly turned their sights on Europe such as Mexico’s CEMEX acquisition of Britain’s RMC.

The EU is the largest trading partner of the Mercosur and the second largest for Central America, the Caribbean and the Andean Community. The current negotiations between the EU and three Andean Community members (excluding Bolivia), and Central America and the Dominican Republic reflect the priority awarded by all sides to strengthening commercial ties.

Migration flows and remittances are a major factor affecting both regions. Spain is expected soon to surpass the United States as the main source of remittances for the Andean Region, not least as Latin Americans in Spain benefit from policies like the Double Nationality Law. However, in the midst of rampant unemployment, Spain has become less receptive to migrants demonstrated by a controversial bid to reform immigration law and an insensitively executed Voluntary Repatriation Initiative.

The EU and its Member States constitute the main source of development cooperation in the region; and play an important role at two emblematic institutions: the Inter-American Development Bank (IDB) and the Caribbean Development Bank.

Lacking consensus?

The partnership between the EU and Latin America is beset by confusion and conflicting messages. On the one hand it is regarded as a threat to competition and on the other essential for cooperation and multilateral reform

The negotiation of Association Agreements between the EU and Latin American sub-regional blocs have either stalled or broken down. Europe has been slow to acknowledge the asymmetries and disagreements within the Latin American blocs and their reluctance to complete Association Agreements.

The expansion of the EU has further complicated matters. Not only do the new Member States have less interest in Latin America, but the expansion of Europe’s borders has brought new emphasis on Russia, while the rise of Asia and the volatile security situation in the Middle East continue to hold Europe’s attention.

The inability to reform the Common Agricultural Policy is also a sticking point. There have also been clear differences between EU Member States over aid: while Spain has increased its aid to the region, the United Kingdom has closed all its international development offices, preferring to disburse funds to multilateral organisations including the EC. And as new pressures are placed on Europe’s aid commitments towards the least developed regions, Latin America may lose out the most.

The process also suffers from an absence of sustained dialogue. A Permanent Euro-Latin American Secretariat with the task of directing work between the Summits is yet to materialise; and there is currently no significant non-governmental forum for debating the EU-LAC partnership since the demise of the Instituto de Relaciones Europeo-LatinoAmericanas (IRELA).

Madrid overhaul

Before the Madrid Summit, a formal and explicit review of the EU-LAC relationship is necessary. The Spanish Prime Minister, José Luis Rodríguez Zapatero, says Europe should promote relations with Latin America and wishes to secure the completion of Free Trade Agreements at the Summit. However, the fall out from the financial crisis, and issues surrounding the implementation of the Lisbon Treaty if it is ratified, the aftermath of the 2009 climate change conference, revitalising the Doha Round, migration and other security concerns, could threaten to brush aside interest in the EU-LAC strategic partnership.

For their part, Latin America is predicted to be in the middle of an early economic recovery and eager to engage with Europe on new terms. But for this to happen, a new discourse on why the partnership is vital for both regions is needed.

Priority should be given to the completion of Association Agreements between the EU and Mercosur, Andean Community and Central America given the rising competition from Asia; and the effort already invested by Latin America. Europe should bolster the services component of the trade agreements to take into account how Latin Americans are more likely to successfully integrate into European societies as economic migrants.

The EU and LAC both have a strong interest in reforming the international system, with the EU supporting Brazil’s bid for a permanent seat at the UN Security Council. There is also mutual interest in expanding security cooperation. Poverty reduction strategies in Latin America have been very successful and the EU should extrapolate these experiences for use elsewhere.

Climate change remains a top EU priority with LAC also demonstrating an increasingly proactive stance in securing an agreement in December. To secure a treaty, greater effort is required immediately to iron out differences. The significance of EU-LAC trade and the carbon intensive portfolio of LAC exports to the EU suggest it is essential that both work together to mitigate the potentially negative ramifications of a treaty on their trade relations, notably in the forestry, agricultural and hydrocarbon sectors.

Waiting until 2010 will be too late to avoid a further haemorrhaging of interest in the partnership. It is therefore encouraging that the European Commission has begun to reaffirm its importance in a rapidly changing world by offering fresh policy recommendations to be considered before the Madrid Summit. This is a tentative but crucial first step, for not only resuscitating EU-LAC relations, but also for the EU to secure some of its most important international goals.

• The authors would like to thank Dr. Geoffrey Edwards, University of Cambridge, for his helpful comments. This article first appeared on Latino Cambio and is reproduced with the authors’ consent.