Bullish Latin America leaders host summit

First meeting with EU counterparts held in Chile

European leaders fly into Santiago this weekend for their first region-to-region summit with Latin American and Caribbean counterparts. But the gathering of presidents and premiers from two blocs is unlikely to prove a real meeting of minds, despite their well-oiled trade relations.

For one thing, beyond shared diplomatic goals like greater democracy and integration, there are a number of simmering bilateral tensions both within and between the two blocs. These include a rift between Britain and its partners over David Cameron’s offer of a referendum on continued membership of the EU; between Britain and Argentina over the Falkland islands; between the EU and Argentina over export restrictions; and between Spain and Argentina over the latter’s expropriation of oil company YPF last year.

Latin America, once a synonym for debt crisis and political failure, is enjoying a renaissance as an emerging power with a burgeoning middle class. It no longer needs to look to Europe to build trade ties with China and the rest of the world. Nor does it need to look to the US, which is not invited to this gathering of the Community of Latin American and Caribbean States, or CELAC, and the EU.

Much will be made of Latin America’s vibrant growth, in contrast to recession in Europe. And as Cuba’s Raúl Castro takes the temporary presidency of CELAC, ideology is sure to figure strongly as left-leaning Latin nations including Venezuela and Argentina stress their anti-colonialist political and anti-establishment economic agendas.

“The region is learning from the past and trying new paths. The Latin American foreign debt crisis happened 30 years ago, and led to a lost decade for the region. We are worried that the same may happen in Europe,” said Alicia Bárcena, the Mexican head of the UN’s Economic Commission for Latin American and the Caribbean (ECLAC).

ECLAC is forecasting 3.8 per cent growth this year from the region, after 3.1 per cent in 2012 – a bright outlook matching the sunny Santiago summer weather. By contrast, Europe is stuck in the deep freeze: the International Monetary Fund predicts the eurozone will contract 0.2 per cent in 2013.

Host Sebastián Piñera of Chile hails the summit as a way to usher in “a new era, a new stage in relations between Europe and Latin America and the Caribbean based less on aid and welfare and more on strategic co-operation for development, in having more open, more integrated markets”.

But as Riordan Roett at Johns Hopkins University noted: “On the private sector side, there is already a very strong relationship between Latin America and Europe. The Europeans invest more [in Latin America] than the Chinese, Indians and Russians combined.”

The EU invested an average of $30bn a year in Latin America and Caribbean countries over the past decade and foreign direct investment is $500bn, according to ECLAC.

However, Latin America – which includes both investor-friendly and populist nations, some with inward-looking policies and others looking out – is far from homogenous. As far as a shared public sector agenda between the EU and Latin America and the Caribbean is concerned, the summit “is basically useless”, Mr Roett said.

The US, he added, “couldn’t care less” at being excluded from the gathering as it is set to remain a pivotal trade and diplomatic player in the region in the years to come.

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