EU leaders in Brussels have announced €45bn (£39bn) in investments to Latin America and the Caribbean, some of which will speed the shift to clean energy, but made little headway thawing a frozen trade deal that critics say will further degrade the Amazon rainforest.
The EU-Celac summit, the first of its kind since 2015, aimed to bring the EU closer to Latin American and Caribbean countries. Disagreements over how to refer to the war in Ukraine in the final text soured negotiations.
The investment package, which includes private sector funding, covers projects to extract critical minerals, electrify bus fleets and help protect the Amazon rainforest in Brazil. It also includes projects in areas like healthcare and telecommunications.
“It’s not just about how much, but also how we are investing,” said the European Commission president, Ursula von der Leyen, adding that she wanted the money to come with high environmental and social standards.
Diplomats at the summit made little progress on the controversial free trade deal with Mercosur, the South American trade bloc, which Von der Leyen said she hoped to conclude this year – beyond a line in the declaration taking note of “ongoing work”.
The EU has not ratified the free trade agreement it agreed in 2019 with four Latin American countries – Brazil, Argentina, Paraguay and Uruguay – because it fears doing so will speed up the destruction of the Amazon rainforest. Under former president Jair Bolsonaro, Brazil rolled back rules to protect the environment and starved its environment agency of funding to enforce laws. Farmers, loggers and miners cut and burned trees in the Amazon rainforest faster in 2021 than they had in the 15 years beforehand.
Luiz Inácio Lula da Silva, who won Brazil’s presidential election campaign on a platform of protecting the Amazon and Indigenous peoples’ rights, has criticised the EU as “protectionist” for attaching strings to the goods it imports.
The French president, Emmanuel Macron, told reporters at the summit it was “not a threat but respect” to apply the same standards at home and abroad. An unlikely alliance has formed in France between environmentalists, who fear the deal will destroy more of the Amazon, and farmers, who worry about competition from foreign imports.
The EU hopes fostering trade with Latin America will help it hit its own climate goals. In a speech on Monday, Von der Leyen highlighted the region’s potential for hydrogen – a gas that can be made with renewable energy to clean up industries like steel-making and shipping – and critical raw materials needed for the energy transition, like lithium.
“Unlike other foreign investors, we are not only interested in investing in the pure extraction of raw materials,” she said. “We want to partner with you to build local capacity for processing, for making batteries, and for the final products, like electric vehicles.”
Ignacio Arróniz Velasco, a trade analyst at climate thinktank E3G, described it as a “subtle but significant shift” in EU rhetoric. During a trip to Latin America last month, Von der Leyen had talked about trade in hydrogen and minerals without adding support for the region’s own industries.
The Argentinian president, Alberto Fernández, praised the agreement for moving away from “extractivism”. “This whole idea that Latin America is just a producer of raw materials has always prevented us from industrialising.”
The summit, he added, was the first time this had changed. “It took us five centuries but we have succeeded.”
Latin America’s biggest trading partner is the US, followed by China, which mostly buys raw materials and crops, and sells manufactured products.
European politicians and businesses have tried to diversify their supply chains away from China in the wake of the war in Ukraine, which exposed the continent’s over-reliance on imports of Russian gas. The move has given new importance to trade links with Latin America and the Caribbean.
“We don’t want to repeat some of the errors of the past,” said Luisa Santos, the deputy head of lobby group BusinessEurope. “We want to make sure that we don’t put all our eggs in one basket.”
The summit declaration also stressed the importance of money to clean up economies, keep people safe on a hotter planet, and pay for damages from extreme weather. In paragraph 23 of the declaration, leaders agreed rich countries would recommit to getting $100bn a year in climate finance to poor countries, a promise that should have been met in 2020, and double finance to adapt to climate change by 2025.
Citing the unmet pledge from rich countries, Ralph Gonsalves, the prime minister of Saint Vincent and the Grenadines, said it was important to “hold their feet to the fire”.
“It would be an awful thing if you wrote this in paragraph 23 and then in 2025 we have no money.”
Yelesa on July 23rd, 2023 at 15:48 UTC »
This is an excellent development, but I find it saddening how difficult it was for this deal to be reached because leaders of Latin American countries still fear the world economy is a zero-sum game, so this had to be said by Von Der Leyen:
Western Europe has actually long moved away from pure resource extraction, because they realized imperialism is actually not good for the economy (it’s absolutely worse for colonized countries, but it’s bad for the colonizing country too). It benefits EU to make the countries they trade with rich and prosperous, because once these countries grow richer, people will have the wealth to buy more European products and services, which will lead to EU economy grow even more. It’s a win-win situation.
This is how EU as a whole runs today, and it took European countries decades of experimentation to reach this conclusion. It started with European Coal and Steel Community in 1951 between Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany. Only coal and steel, and even then this was a side-eyed at first. In those decades up to 1993 (creation of EU), Latin America went from experiencing Western Europe imperialism to experiencing American imperialism. Barring some cases like Falklands which are actually remnant of that era, Latin American and Western European connections were largely cut.
Obviously, Latin America did not see the cultural transformation that Western Europe went through those decades, so it’s understandable why they are so wary of cooperation. However, I hope the increased cooperation will bring to surface Eastern Europe’s history, because we know what it means to experience colonialist imperialism, and how once we joined EU we are actually doing better than Russia in every aspect of our lives. We love to see our increased prosperity to be reproduced in Latin America too. I know that right now due to Ukraine, there are many of us who are angry that you see us the same as colonialist Western Europe, when we are actually more similar to you, but I trust increased cooperation will bring that more to the surface.
grislythrone on July 23rd, 2023 at 14:49 UTC »
Wow this seems pretty huge
Winstonoceaniasmith on July 23rd, 2023 at 13:52 UTC »
SS: the Eu has just signed a nearly 50 Billion Euro deal of investments into latin america mostly in the fields of reneweable energy production, rare earth mineral extraction and telecommunications.
The Argentinian president, Alberto Fernández, praised the agreement for moving away from “extractivism”. “This whole idea that Latin America is just a producer of raw materials has always prevented us from industrialising.”
However progress on the EU Mercosur trade deal remains slow.