Redefining the EU-Latin America Relationship

August 14, 2023

In July, eight years since their last gathering, heads of state and government from the European Union and from Latin America and the Caribbean (LAC) met in Brussels. The summit ended on a promising note: through its Global Gateway program, the European Union will invest €45 billion ($49.5 billion) by 2027 to support a fair green transition, an inclusive digital transformation, and human-development outcomes in LAC.

Redefining the EU-Latin America Relationship

As Jean Monnet, the architect of European unity, reportedly observed, all people are ambitious, but they are ambitious either “to be” or “to do.” In today’s “polycrisis” world, action matters more than pageantry. Ordinary citizens expect concrete results from multilateral commitments, and it is time to deliver.

To this end, the EU-LAC relationship must be redefined. The recent period of piecemeal engagement, with a focus on only some issues or on relations between certain countries, has led to significant gaps in trade and sustainable development. Both sides would benefit from a more expansive agenda linking the regions as a whole, rather than agreements between small blocs of countries aligning on environmental, commercial, and investment matters.

According to a recent Elcano report, expanding and harmonizing trade agreements between LAC countries and the EU would create an immense economic space – 1.1 billion people and total GDP of more than €21 trillion, similar to that of the United States. Finalizing the EU-Mercosur agreement would be a crucial step in the right direction.

To realize this potential, European policymakers must view LAC not merely as a source of raw materials, but rather as an equal partner in addressing global challenges. The region has a proven track record in devising innovative solutions: the United Nations Sustainable Development Goals, for example, were born at the Rio+20 Summit and are a product of LAC countries’ efforts to build a more equitable and resilient world.

The fight against climate change, in particular, will require large-scale investment and rapid innovation, especially in new materials and forms of mobility, digital services, and management of natural resources. Climate action also creates opportunities for cross-border technology transfer and strengthening agribusiness. The Global Gateway program can advance these goals, but we must make headway before the next meeting of European and LAC heads of state and government in 2025.

CAF – Development Bank of Latin America and the Caribbean (of which I am executive president) has formed a partnership with the European Commission and the Inter-American Development Bank to bolster the new EU-LAC investment agenda. So far, the partnership’s dynamic private-sector roundtables have identified more than 130 projects to fund, ranging from bringing digital connectivity to 85% of Colombians by 2026 to scaling up hydrogen production in Chile and Uruguay and rolling out renewable energy in Jamaica. Other initiatives are focused on sustainable urban mobility in Bogotá, Quito, San José, and São Paulo, sanitation and chronic child malnutrition in Ecuador, and food security in Guyana.

With Spain holding the presidency of the Council of the EU until the end of this year, our shared vision of a robust bi-regional alliance will have a greater chance of becoming a reality. Shifting from fragmented ties to a more cohesive partnership, the two regions can move forward using the UN 2030 Agenda for Sustainable Development as their roadmap.

To advance this goal, CAF is working with the Spanish government to encourage dialogue. The collaboration has already proven fruitful: all European and LAC ministers of economy and finance will convene on September 15 in Santiago de Compostela to discuss the future of the bi-regional relationship.

Rather than merely give the appearance of close collaboration, the ambition of CAF and other regional actors is “to do,” as Monnet put it. We want to help build a strong EU-LAC alliance that advances a bold investment agenda and advances both sides’ interests and prosperity. As mounting existential problems increasingly call for joint action, European and LAC countries must build on recent progress toward a stronger and deeper relationship.

Sergio Díaz-Granados
Sergio Díaz-Granados

Executive President, CAF -Development Bank of Latin America and the Caribbean-