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Economy & Trade

Can Europe and Latin America Meet as Equals?

RIO DE JANEIRO, Jan 26 2013 (IPS) - The European Union’s serious economic and financial crisis stands in stark contrast to the relative stability and decade-long growth enjoyed by Latin America and the Caribbean and could put the two blocs on equal footing, giving the Southern region more leverage to further its demands and economic growth.

From the European Union to Latin America, protestors have taken to the streets against austerity policies. Credit: Nikos Pilos/IPS

The European Union (EU) is set to meet with the Community of Latin American and Caribbean States (CELAC) for a bi-regional summit in the Chilean capital of Santiago this Saturday, Jan. 26 and Sunday, Jan. 27.

The meeting will bring together heads of state or high government officials from the 60 countries that make up the two regional blocs, which have a combined population of 1.07 billion and strong cultural, historic and commercial ties.

But the process of forging these commercial ties has not been without its share of difficulties and setbacks, despite the fact that, as the founding documents of CELAC state, “the European Union is the top direct investor in Latin America and the Caribbean, its leading cooperator, and second largest trading partner“.

For Chilean political scientist Esteban Valenzuela, of the Alberto Hurtado University, the bi-regional summit represents an opportunity for Latin America.

“This is probably the ideal time to ask (the EU) to reach a more global understanding and make free trade and agricultural barriers a two-way street that will facilitate investments and allow Latin Americans to invest in their depressed markets,” Hurtado said in an interview with IPS.

It is an opportunity that Latin America must, however, seize “without arrogance”, as the current cycle of high prices of copper, gold, natural gas, oil and other raw materials in the region won’t last forever.

“There are indicators that reveal that China’s economic growth is ‘slowing down’ and that India is facing problems, and these indicators (are a warning sign that) call for enhanced dialogue in the region, (urging it) to seize the opportunity to improve public policies that produce high deficits,” he added.

It could be a turning point for the region’s relations with Europe, but it will only benefit Latin America and the Caribbean if the EU understands that it must treat its counterpart as an equal, Chilean senator Alejandro Navarro, of the left-wing Movimiento Amplio Social (Broad Social Movement), said.

To see this clearly, one need only look at Latin America’s controversial history with the United States, “where our region has traditionally been treated (by the U.S.) as its backyard, and relegated to a minor, supporting role,” he noted.

“Which is why I believe that if Europe understands that it must deal with Latin America on equal terms, it won’t be hard to overcome any problems that may arise in this integration process,” the legislator told IPS.

“With the United States, the possibilities for integration ran their course and bore no fruits. Europe now represents an opportunity that cannot be passed up,” Navarro concluded.

The summit, whose agenda focuses on building and strengthening “a strategic alliance for sustainable development”, is preceded by a meeting of the business sector organised by the head of the Chilean Confederation of Production and Commerce (CPC), Lorenzo Constans, among others.

“At a time of economic and financial uncertainty for Europe, the EU has the possibility of joining forces with Latin America and the Caribbean in a great integration system (…), striving to overcome the challenges posed by development, growth and poverty eradication,” Constans wrote in the official website for the business meeting.

In contrast, Carlos Romero, a Venezuelan political scientist and expert on international affairs, is not so optimistic, as he believes that while relations between the two regions may have “worsened with the crisis that began in 2008, they have been declining for the past ten years.”

“The EU-CELAC summit in Santiago is merely a bureaucratic meeting, of no value (for the region) except for the Southern Cone of South America and, in particular, for the strong economic ties between Brazil and Germany. It’s more like a collective catharsis,” Romero, who is also a university professor, told IPS.

“The timing isn’t the most appropriate, not only because of the difficult situation in the euro zone, but because one of the priorities for Latin America is strengthening its ties with its natural market, which is the United States and Canada, and seeking new markets in the Asia-Pacific region, especially China but also India, Southeast Asia and Australia,” he said.

Brazilian economist Adhemar Mineiro, for his part, observed that it is difficult to imagine a more balanced relationship when “unfortunately the EU has opted for a strategy of further liberalisation and adjustment, which has deepened the crisis not only in Europe but around the world.”

In his view, the summit should be an opportunity for the peoples of Latin America and the Caribbean to “harshly criticise this option taken by the European governments”.

It is also a time for the region “to support the struggle of social sectors in Europe that are combating the adjustment policy, which causes unemployment and makes workers foot the bill for the crisis, going as far as dismantling the social protection mechanisms of the so-called welfare state.

“The governments of Latin America should also criticise that option of the European governments, and withhold their markets (including their labour markets) as a solution to those problems,” said Mineiro, who is also an adviser to the Inter Trade Union Department of Statistics and Socio-Economic Studies (DIEESE).

CELAC was created in 2010 in the Mexican tourist district of Riviera Maya, in what the Brazilian Foreign Ministry calls “a historic decision” by the region’s heads of state to establish a new mechanism of political convergence and integration.

According to the Brazilian government, this mechanism will also foster a regional identity for addressing issues of integration and development.

There has been progress in talks with Europe in that sense, as well as some sectoral agreements, like the EU-CELAC Structured Dialogue on Migration, the EU-CELAC Coordination and Cooperation Mechanism on Drugs, and a Joint Initiative for Research and Innovation.

Colombian President Juan Manuel Santos announced that his country’s main proposal to the EU-CELAC forum at the Santiago summit would be a declaration calling for the signing of an international treaty within the U.N. system to regulate arms sales.

But as Mineiro pointed out, the EU wishes to emphasise talks on trade and, especially, direct investment.

The European bloc is negotiating separate agreements with Mercosur (the Southern Common Market), made up of Argentina, Brazil, Paraguay, Uruguay and Venezuela, and has strategic alliance treaties with Brazil and Mexico, as well as trade agreements with Colombia and Peru, and economic partnerships with Caribbean countries.

*With additional reporting by Humberto Márquez in Caracas, Marianela Jarroud in Santiago and Constanza Vieira in Colombia.

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