Spanish Presidency of the EU Council: an opportunity to strengthen relations between the EU and Latin America
Report published by the Elcano Royal Institute analyzing the most widespread narratives in Europe on Latin America (LA), from an economic, political, and business perspective. The aim is to show the region's potential to boost relations between the European Union (EU) and LA. In the current context of the Spanish presidency of the Council of the EU, the EU's relations with Latin America have become a key priority on the European agenda. The report offers a balanced view of 'the only emerging region that is trying to converge towards development through democracy' and proposes the creation of an EU-LA Trade and Technology Council and the signing of the free trade agreement with Mercosur to boost the relationship.
Key findings:
- Economy: Although growth in relative terms has been low, especially in terms of income per capita, progress in macroeconomic performance in Latin America is remarkable. The frequency of financial crises has been reduced, from an average of four per year (during the period 1970-2000) to one per year since then. In addition, banking system supervision has developed sound financial systems, with seven countries, including Argentina, Brazil and Mexico, having adopted or on track to adopt Basel III standards.
- Politics: Latin America ranks first among emerging regions in democratic development and respect for human rights. The setbacks that have occurred in recent years, which have fueled the narrative that Latin America is a political disaster, are more conjunctural than structural. According to the report, 67% of Latin American citizens believe that "democracy may have problems, but it is the best system of government".
- Geopolitics: The perception that China has occupied a space in Latin America that has been 'hollowed out' by the EU and the US is false. The EU and the US remain the dominant economic actors in Latin America. In fact, the EU is the largest investor in Latin America and, by contrast, among the emerging regions in which China invests directly, Latin America receives the smallest share, with a stock of FDI that barely exceeds 1 per cent of GDP.
- Business attractiveness: Spain and its companies continue to bet on Latin America; between 2007 and 2020, out of every 100 euros invested abroad, 30 went to Latin America. This shows that Spanish investment has not withdrawn from the region; in fact, most of the profits made in the region have been reinvested there, which according to the report means that Spanish entrepreneurs are "long-term investors".
- Driver for further momentum in the EU-LAC bilateral relationship: Ratification of the EU-Mercosur agreement would be a milestone and a great success for both parties. If the agreement is ratified, the EU would have agreements with 94% of Latin America's GDP, compared to 44% for the US and 14% for China; the EU would be the world power with the greatest presence and links with the region. Indirectly, this international integration would become intraregional integration for Latin America, a key objective of the region for decades.
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