The other transatlantic relationship: strengthening EU-Latin America relations

28 April 2006

Political and economic relations

Eneko Illarramendi Landáburu, Director-General for External Relations and European Neighbourhood Policy, European Commission, opened the debate by describing the background to the EU-Latin American relationship.

He said Latin American countries had embraced democracy and carried out economic and social reforms. The EU was now the region’s largest foreign investor, the largest donor and an important trading partner. The two continents had also established a productive political dialogue.

In December 2005, the Commission adopted a Communication to reflect these changes. Mr Landáburu said this sent a strong message about the EU’s commitment to the region and moved relations between the two up the external relations agenda. It argued for greater collaboration between the two sides and proposed a set of tangible EU measures, such as Association Agreements and funding through the Commission’s assistance programmes and the European Investment Bank.

The Director-General outlined the five key aspects of the EU’s strategy: to reinforce a joint platform to influence global events; promote regional integration; support government efforts to fight social inequality; foster economic and social cohesion; and establish joint EU-Latin American educational initiatives and exchanges.

The Vienna summit

The forthcoming EU-Latin America/Caribbean Summit, being held in Vienna, will take place against a background of regional tension, with the failure of macro economic policies pushing up poverty levels and regional inequalities. Mr Landáburu said democratic regimes had not fulfilled their promises and this had led to the rise of the populist movements in Venezuela and Bolivia.

These events, together with growing nationalism and regional unrest, have hindered the regional integration that Mercosur and the Andean Community hoped to achieve. In this context, the EU’s role is to help governments strengthen social cohesion and regional integration.

Mr Landáburu was upbeat about the Summit, considering it a “unique opportunity to boost EU relations with Latin America” and evaluate the willingness and determination of countries in the region to deepen their European ties.

New impetus needed

Pablo Garrido Araúz, Panamanian Ambassador to the European Union, believed that EU-Latin American bilateral agreements had helped to foster good relations. The Union is now Latin America’s second largest trading partner and EU investment rose from 176 billion euros in 1997 to 200 billion euros in 2003.

Despite this, Mr Araúz felt the relationship needed a new impetus: greater EU-Latin American cooperation would improve social cohesion and increase the region’s respect for human rights and security.

Turning to the Vienna Summit, he shared Mr Landáburu’s optimism, but was cautious about whether it would bring tangible benefits to the Latin American people, stressing the importance of follow-up mechanisms to ensure it brought long-term benefits.

A short history of Mercosur

Monica Yanakiew, a journalist with the Brazilian newspaper, O Globo, said Mercosur (the regional organisation comprising Argentina, Brazil, Paraguay and Uruguay) had begun well in 1991, but had gone into decline after the 1997 world financial crisis, partly because Mercosur countries had not been able to give each other the necessary financial backing.

Ms Yanakiew believed that the EU-Mercosur process had also reached a standstill because, given the region’s economic problems, Latin Americans were more concerned with fighting poverty at home than international relations.

On the issue of EU-Latin American relations, she believed these hinged on delicate negotiations over agricultural and trade rights. Latin Americans felt that the EU took a protectionist line while expecting Latin America to open its markets. Countries in the region were liberalising their markets, but were concerned that this would result in greater social inequality and social exclusion.

Prospects for regional integration

Laurence Argimon-Pistre, Head of Unit for Mercosur and Chile, Directorate-General External Relations, European Commission, explained that regional integration was a “hot issue” in Latin America, and wondered whether Simon Bolivar’s “dream” of a united continent could ever be fulfilled.

Mercosur had been a “tangible success” for the countries involved - in particular, for Brazil, whose regional exports had doubled over the last 13 months. Mercosur could play an important role in strengthening links between countries so that they could present a united front to the world market.

She described Mercosur as “an imperfect customs union” which drove the region’s economy. As a result, intra-regional trade had increased four-fold between 1990 and 2000. Mercosur was a “region in the making” working on social matters, the environment and audiovisual cooperation. The EU-Mercosur Agreement was designed to boost democracy as well, through setting up a democratically-elected Parliament.

But there was a downside, said Ms Argimon-Pistre. Firstly, the member countries’ leaders did not seem to have any long-term vision for Mercosur. Secondly, the organisation seemed unable to solve conflicts between its members.

“Where is Mercosur’s common vision?” she mused, adding that it often appeared that Mercosur was the sum of four national agendas. For Ms Argimon-Pistre, this lack of clarity was symbolised by the organisation’s inability to complete the protocols needed for a free trade area and customs union.

For its part, the EU hoped that its Association Agreement with Mercosur would help the latter’s members to develop their industry and welcome EU investment, encourage growth and reduce poverty. She was anxious for regional integration to push ahead, comparing it riding a bicycle: “If you stop pedalling, you fall off.”

Civil society left out of the picture

Camilo Tovar, European representative for Asociación Latinoamericana de organizaciones de Promoción, gave the civil society perspective. This emphasises the social dimension of integration and EU-Latin American relations, and stresses that all economic activities should be conductive to sustainable development and social justice. In contrast, he felt that the current Latin American integration process focused solely on economic issues.

As regional integration affects people’s livelihoods, all sectors of society must be involved. Civil society’s role is to integrate people as well as markets and it is crucial in helping to achieve social cohesion. Unfortunately, current frameworks do not encourage civil society participation and exclude ordinary people from the decision-making process. According to Mr Tovar, the EU has a long way to go to formalise civil society participation in EU-Latin American relations.

Democracy in transition

Professor Laura Tedesco, from the Universidad Autónoma de Madrid, said domestic politics strongly influenced Latin American regional integration. Recent elections had demonstrated that the democratisation process was risky and unpredictable. Many of the continent’s countries were in political transition and political parties were failing to fulfil their democratic roles.

On the rise of populism in Latin America, she agreed with Venezuelan President Hugo Chavez that his election was “not the cause, but the consequence” of the failure of neo-liberalism and economic reforms to eradicate poverty. She feared that political polarisation was threatening democracy as well being as a sign of deep economic inequality.

Professor Tedesco argued that the EU could play a dual role in Latin America by strengthening democracy at regional and local level, and supporting political dialogue. She noted that the EU took a non-interventionist approach to Latin American crises, for example, keeping its distance during the attempted coup in Venezuela.

Like other speakers, she stressed that any EU initiative had first to resolve the current trade unbalance. This would be a major step in fighting poverty and inequality, and should be a key topic at EU-Latin American policy dialogues.

Prospects for the EU-LAC Summit

In her closing remarks, Maria de Lourdes Dieck Assad, Mexican Ambassador to the EU, described Latin American aspirations for the Vienna summit. She said the region would use the meeting to “strengthen its relationship with the EU”, and to improve international trade and social cohesion in the region.

The Ambassador said ensuring that countries implemented the summit’s final declaration would be a major challenge. She also hoped that the meeting would enhance future collaboration and that further meetings would more closely reflect the population’s needs.