The European Union and Latin America have enjoyed a Strategic Partnership since the first bi-regional Summit in Rio de Janeiro (Brazil) in 1999. They must work and live like natural allies linked by strong historical, cultural and economic ties. They must cooperate closely at international level and they should maintain an intensive political dialogue at all levels - regional, subregional (Centroamerica, la Comunidad Andina y Mercosur) and also more and more at bilateral level. The EU is the leading investor in the region and the second trading partner of Latin America. 

 

The European Union and the USA established diplomatic relations as early as 1953, but it was only in November 1990 that the cooperation was formalized for the first time with the Transatlantic Declaration. Since December 1995, a new Transatlantic Agenda (NTA) has provided the foundation for the relationship. An ambitious agenda of cooperation between the EU and the US is taken forward via constant, intensive dialogue. This dialogue takes place at various levels, from the annual summit meetings between EU and US Leaders to technical work at expert level. Within the framework of the NTA and in line with the Transatlantic Economic Partnership (TEP) launched in 1998, the Transatlantic Economic Council (TEC) was created in 2007 to take forward efforts to boost the transatlantic economy. Together, the EU and the USA have the largest bilateral trade and investment relationship in the world, roughly 40% of the world trade and over 60% of the world GDP. In keeping with the evolving political and legal personality of the EU, there is active cooperation across a host of sectors: cooperation in justice and home affairs, energy and energy security, environment, science & technology, education & training and so forth.

On 4 November American voters choose Mr Barack Obama as the 44th President of the United States. While the voters learnt much about the President’s views on Iraq, Afghanistan and other key foreign policy issues, little was said about relations with Latin America. Despite its importance to the US, Latin America the truth is that it didn’t emerge as a significant topic of debate during in the electoral campaign. However one of the first acts of Mr Obama as President-elect was to meet the Mexican President, Mr Felipe Calderón.

 

Among the main issues to be solved by the new Administration after January 20^th 2009 will be building on the substantial legacy of the Bush Administration and forging new ties with key Latin American states in a period of major international economic turbulence and in the context of an altered geopolitical landscape. Latin America expects the fulfillment of the promises made by President Barack Obama of a relationship of equality among states and a ‘bottom-up’ approach to reducing poverty. It will be also necessary to address the impact of the current global financial crisis on the relations with Latin America.

 

There is no doubt about it, the present US President and Secretary of State Clinton, leading his foreign policy team, will face a Latin America that is more nuanced, more divided and less certain about the region’s future. The new Administration is about to encounter a Latin America concerned about the prospects for continued economic expansion after five years of steady growth and already beginning to suffer from the initial impact of an anticipated global economic slowdown.

 

In my view –in regards to the US-Latin America relationship-, several global policy factors of today will influence the capacity of the US Administration to articulate a regional policy that could be different from the policy pursued so far by the previous Administration:

 

·                    The slow-down in the US economic activity is having broad, even if undetermined, consequences for the Western Hemisphere and the rest of the world. Economic turbulence is having an impact on the implementation of any new regional policy for the Administration, is restricting available resources and placing a new premium on stimulating growth in the US import economy while reigniting foreign investment. Latin America has long looked to the US and the ‘Washington consensus’ for guidance on a host of economic issues, from macroeconomic policy and financial flows to finance growth. The current crisis has begun to spread into the emerging markets of Latin America and produced forecasts of substantial slow-downs in growth, effectively ending any period of accelerating economic growth.

 

·                    The overall direction of US-Latin American relations remains closely linked to complex and difficult US domestic issues such as immigration reform, homeland and border security concerns including the border fence with Mexico, US domestic drug consumption and drug laws, and the prevailing public attitude towards open markets, free trade and international competition. Achieving real energy security with emphasis on renewable and clean sources of power may well be the greatest domestic challenge facing the US. Subsequently, it is hard to see how attitudes towards the US and its policies will change significantly in Latin America without movement on these critical domestic issues. The old adage about the US needing to lead by example remains fundamental to revitalizing its ties with Latin America.

 

·                    South America is demonstrating a desire for greater political and economic autonomy from the US, and many Latin American nations –led by Brazil and Venezuela– have adopted new strategies for integration as well as national agendas that –at least until the current economic crisis– allowed for the flexing of new found agricultural, energy and financial muscle. With this economic heft comes a greater desire to control one’s political future. Subsequently, from the establishment of the Union of South American Nations (UNASUR) and the convening of a December Latin America summit without the US, to the establishment of a South American rival to the IMF (Banco Sur) that breaks with the dictates of the World Bank and the International Monetary Fund. Even strong trade partners of the US such as Chile and Mexico have signed dozens of free trade agreements in all parts of the world and seek more agile and diverse integration into the global economy. Latin Americans are making progress against the traditional asymmetry that dominated relations between the North and Southern hemispheres during the 20th century. The entry of China and India into the global economy, coupled with the steady presence of the EU and a more activist Russia, will ensure the field of Latin America’s potential international partners remains diversified. The diplomatic leverage and economic influence of the US remains important but it is undergoing comparative decline. The present US Administration must make quick adjustments to accommodate these changing realities.

 

·                    However there is a a majority of nations like Brazil, Chile and Uruguay that subscribe to a moderate, market-friendly social democratic course with expanding safety nets,  since 2001, Latin America has moved further to the left of the political spectrum. Popular disenchantment with many aspects of the ‘Washington Consensus’ and the structural reforms of the 1990s have resulted in a nostalgic shift back to more state-centric, socialist solutions. Yet the Latin American left is far from monolithic and is divided. Chávez’s desire to become the energizing axis for Latin America’s socialist integration as well a pivotal player in a multi-polar world that freezes out capitalism, globalization and weakens the US is ambitious for the leader of a coalition of poor states whose combined GDP is equivalent to less than that of the state of Illinois.

 

·                    No matter how important Latin America could be to the interests of the US, the region will have to continue playing a second role at the scenery of US foreign policy due to the critical challenges focusing the mind of occupant of the White House such as: Terrorism, control of Weapons of Mass Destruction (WMDs) and deterring Iran and North Korea from acquiring nuclear weapons, Iraq, Afghanistan and Pakistan, Russia and China. The Middle East with the never ending Israeli-Palestinian conflict, but also   Europe, India, Taiwan, South Korea, and Turkey will probably get greater attention than Latin America as these massive geopolitical challenges are certainly more complex than the less urgent Southern Hemisphere issues.

 

While nobody dares to speak openly of Latin America being the ‘backyard’ of the USA, all South America, and Central America remain very much part of the same neighborhood as ever and its problems have a deep and enduring impact on the US Administration policies either we like it or not.

 

 

Before getting elected President Obama promised a new partnership with Latin America, one that he has claimed will renew US engagement with the Americas. Overall, the outlines of Obama’s foreign policy for the world and the region were shaped by key players from the Clinton Administration such as the former National Security Adviser Tony Lake, the former Clinton advisor Greg Craig and the former Assistant Secretary of State for African Affairs Susan Rice.

 

President Obama displays a new persona to the citizens of the Americas. Obama generates tremendous media appeal in many quarters and will capitalize on his identity as the first non-white US president, on his charisma, youth, energy and abundant rhetorical skills to usher in an aura of change.

 

Certainly changes on certain issues will take place.

 

Cuba: Perhaps a two-step approach with the removal of restrictions on family visits and remittances to Cuba at first and a ‘transition option’ urging the unconditional release of political prisoners towards a reciprocal lifting of the US embargo and the lure of normalized diplomatic relations. We shouldn’t even disregard President Obama entering into direct diplomacy with Cuba’s Raul Castro.

 

Colombia: The Andean Counter-Drug Program will continue in order to support Colombia’s fight against the FARC and to end terrorism.. Contrary to current Latin American opinion, Obama –while candidate- affirmed support for ‘Colombia’s right to strike terrorists who seek safe-haven across its borders’, a clear endorsement of Colombia’s strike against the camp of FARC leader Raul Reyes in March 2008 that caused a crisis in relations with Ecuador and threats of war by Hugo Chávez. However President Obama will likely continue expressing some displeasure over the alleged right-wing ties of the Colombian President Alvaro Uribe and maybe he will ration some funding for military assistance in Plan Colombia, helping to prepare for support to deal with demobilization, reintegration and other human security issues in Colombia. On the other hand President Obama has expressed always his opposition to the Colombian Free Trade Agreement as it stands now and vows to ‘end impunity’ and improve accountability in Colombia, as well as demanding greater protection for Colombian trade unionists and stiffer labor and environmental conditions before passage of goods.

 

Mexico: Obama’s views on Mexico are not so clear. In 2007, he noted that US-Mexican relations have become captive of just the immigration debate. There is no doubt that from the new Administration the message will continue being to recommend both increased border security and comprehensive immigration reform but perhaps they will offer as well some few specifics other than urging a path to citizenship for the estimated 12 million Mexicans presently in the US illegally. The new Administration is taking a strong position on building on the counter-drug efforts of the Mérida Initiative but they stress also the need to achieve a reduction on the demand from the US but to stem too the flow of guns, cash and precursor chemicals from the US into Mexico that constitutes the logistical support of drug dealers.

 

On other issues such as Trade, the Obama Administration looks to be on the verge of adopting positions already championed by critical Democratic constituencies such as organized labor. The Obama stance on free trade includes the controversial promise to renegotiate the North American Free Trade Agreement (NAFTA) and to review other agreements such as the CAFTA-DR treaty which President Obama opposed when candidate.

 

On contributing to Economic development/poverty reduction the Obama Administration looks to advocate on doubling spending for foreign assistance, expand the Peace Corps, develop a greater diplomatic presence in the Americas and support broad, deep institutional change throughout the region.

 

The Obama Administration would certainly attempt a return to greater multilateralism, seeking to breathe renewed life in the Organization of American States (OAS). Brazil would loom large as a courted partner. Finally, energy policy, climate change and the environment will likely receive top billing on the Global Hemispheric agenda of the Obama Administration.

 

 

For the Europeans as Stanley Hill puts forward “the historical importance of the European-Latin American connection is profound” and we can confirm that it is more and better than just profound. The European presence has been for centuries extremely important in the region. Not only the Spaniards and Portuguese but after the colonial period and, after the independence, the increased importance of the political, economic and cultural relations with the United Kingdom, Italy, France and Germany, confirm this assessment. The European trade and investments in the region were greater than the US’ throughout the nineteenth century and the early twentieth century. After the World War I the US predominance, a situation that started at the beginning of the 1900s, was definitively established. This remained throughout the Cold War, when the US became the leading external actor in Latin America. Although, the European economic recovery allowed some attempts of increasing the European role in the Latin American political affairs, the US hegemony was not actually challenged. As Roberto Russell express: “after World War II, the close alignment of Latin America with the United States and the priorities given by Europe to regional integration and to relations with other areas of the world prevented the development of significant interregional ties with Latin American”.

 

The creation and development of the European Community did not modify this situation. In the economic aspect, the main EC’s concern was to preserve the flows of trade and investments in the region, a situation that has not been substantially altered. Conversely, the EC attempted to challenge the US hegemony in the Western Hemisphere political matters. Since the early ’80,s onwards some EU countries have sometimes promoted a foreign policy conflicting with the US’, the better example of which was the French recognition of the Frente Farabundo Martí guerilla in the Salvadorian civil war, in 1981 or even the Spanish Socialist government’s attitude towards Cuba challenging at times the US policy.

 

As it was asserted in 1990, “The relationship between the European Community and Latin American has been characterized by an asymmetry between the importance of attached to its political aspects and the low profile allowed to the economic links”. The European Union dependency on the US military umbrella did not allow any conflict in what it is still considered the US’ zone of influence. Nonetheless, as such a structure collapsed by of end of the 1980s, the EU currently had a wider space of maneuver by designing its foreign policy. After the breakdown of communism, the EU gradually modified its policy toward Latin America. The most important change has been so far that the radical distinction between political and economic matters has been relatively eliminated.

 

The accession of Spain to the EU in 1986 is also important factor to explain the evolution of the relationship between the UE and Latin America. Evaluations made at the beginning of the 1990s were very skeptical concerning the Spanish success in promoting closer relations between both regions. In general, the conclusion was that the Spanish presence in the EU had not mostly altered the pattern of relations with Latin America.  However, an analysis of the matter leads to different conclusions. If the evaluation of the Spanish performance stress the original aims fostered by the Spanish Government, the critics can be partially accepted. The original objective of obtaining a similar treatment to that given to the countries of the African Caribbean Pacific area was not achieved because it was simply a not very realistic goal. Nevertheless, much of the achievements in the relationship EU – Latin America in the last decade was the result of the Spanish action. The New Guidelines passed under the direction of Commissioner Abel Matutes in 1990 and the opening of the funds of the European Investments Bank was largely due to the Spanish request. By the same token, the approach between Cuba and the EU responded to the personal interest that the Spanish President, Felipe Gonzalez, had in the promotion of closer economic and political relations with this Caribbean country. In summary, an objective evaluation of the facts leads to assert that there is not doubt that the Spanish leadership and presence inside the EU has been crucial in the design of the Latin America EU’s policy. Although Portugal has not carried out initiatives of its own, this country has favored the Spanish proposals too.

 

The EU’s policy toward Latin America must also be considered, at least partially, as a result of the economic changes that have taken place in most of the countries of the region. The process of economic reform has led to the dismantlement of tariff and not tariff barriers in Latin America, a situation that benefits the European products. Similarly, the more favorable economic environment to foreign investments allows European companies to displace their activities to some Latin American countries. No doubt about it, the reason behind this policy is the promotion of the European economic presence in these countries.

 

Despite the relative success of the EU’s policy in Latin America, the new millennium implied a spill back in many aspects of the bilateral relation. Some of the great expectations created in the 1990 became illusory. In particular, the relations with Mercosur became increasingly complicated and the negotiations towards a free trade agreement stalled. In terms of the EU’s geo-economic and strategic interests, Latin America was perceived until 2002 in the following terms: Mercosur, Chile as potential strategic partners, Mexico as economic and political ally, and the Andean Community and the Central American Common Market as political allies. However, from 2003 onwards, the political and economic transformations that took place at hemispheric and at global level have led the EU to review its policy, in particular its relatively minor economic interest on the Andean and Central American region. Recent events such as the failure of the Mar del Plata Summit (November 2005) to re-launch the FTAA and the results of the EU – Latin American Bi-regional Summit held at Vienna (May 2006) confirm these changes.

 

The EU strategy for the period 2007-2013 is based on four points that ratify the policy promoted since the early 1990s:

 

·                    intensification and canalization of political dialogue;

·                    the creation of an appropriate environment for trade and investments; 

·                    the support to countries that are promoting development and stability ;

·                    cooperation to promote mutual understanding.

 

It is valid to state that in general terms the great expectations created in the ’90,s have been no fulfilled. Both Europeans and Latin Americans are disappointed with the current state of bilateral relations. On the one hand, many things have changed in Latin American. The turn to the left in countries such as Bolivia and Venezuela, the crisis of regional integration schemes such as Mercosur and the Andean Community and the increasing criticism to the led–market economic policy have influenced the relations with the EU. To a point the optimistic view of a politically and economically stable region has been changed for the traditional image of a region in some kind of a crisis.

 

On the other hand disappointment also exists in Latin America. Especially in some Mercosur’s political and economic fields, the EU is severely criticized for its intransigence to modify the Common Agricultural Policy, a key factor to explain the stagnation of the free trade negotiations. Other criticism is the failure of the bi-regional summits as a mechanism of political dialogue. Finally, it is also criticized that the EU has been mainly devoted to the widening of the integration process and the re-designing of the Transatlantic Dialogue with the US, putting aside the interregional relations with Latin America.

 

As a conclusion the political and economic scenario has changed both at regional and global levels. The political turn to the left in some countries and the disappointment with the neo-liberal reform have modified the agenda of some Latin American countries. In the EU, in spite of an increasing interregional activism, the agenda has been oriented to widen the integration scheme and to participate in the negotiations of World Trade Organization. At global level, the September 11^th terrorist attacks modified the international agenda, leading to a “securitization” of the international agenda. Unfortunately all these factors have influenced the new EU agenda towards Latin America.

 

 

It is valid to say that the EU policy is no other thing than a strategy to defend the European interests in Latin America. Its ultimate objective is to defend the current EU position in the Latin American economic affairs. As such a position can be jeopardized by the establishment of FTAA, the EU will not hesitate in challenging to the US to maintain defend its interest, as did in the Helms Burton affair some years ago.

 

The new EU strategy must be seen as a rational response to worldwide political and economics trends. It is impelled primary by the desire to reinforce the EU political, economic and cultural presence in Latin America as a result of a change in US policy since the end of the Cold War.  In the end the EU trade strategy towards Latin America should be connected to the EU’s external political and economic interests, particularly encouraging regional cooperation and securing markets access against its major international competitor, the United States.

 

The increased European interest in Latin America responds to the transformations in the international economic system. After the conclusion of the Cold War, most of the commentators in the field of international political economics foresaw the emergence of regional economic blocs. The rationale was that the world would be divided in three economic blocs: Europe around the EU, including some kind of preferential agreement with Northern Africa; Asia around Japan and the Americas led by United States.

 

The idea of establishing a regional bloc of the Americas was launched by US President George H. W. Bush, in the “Enterprise Initiative for the Americas” speech in July 1990. The USA proposed the creation of a Free Trade Area of the Americas (FTAA) from Alaska to the Patagonia. Furthermore, the Enterprise for the Americas Initiative included a reduction and rescheduling of the debt and placed “greatest emphasis on encouraging foreign investment”. These objectives were confirmed in the Summits of the Americas held in Miami in December 1994, Santiago in 1998 and Quebec in 2001.

 

Though the FTAA didn’t not eventually result in a “Fortress America”, its creation could have affected EU’s trade exchange and investments flows in Latin America. This could have reversed EU’s advance in its commercial relations with Latin America in the last decade. Reasons exist to think that the EU could have been damaged by the trade diversion that FTAA could have produced. The experience of the North American Free Trade Agreement (NAFTA) is an example that justifies this argument. Between 1995 and 1999, namely after the signing of NAFTA, the European positioning in the Mexican Market experienced a drastic reduction, surpassing loss of up to 7 points. If a World Trade Organization regulation on investments would have been approved in the FTAA, the European investors would have been in a situation of disadvantage with regard to US and Canadian capitals.

 

Conversely, EU involvement in the Caribbean Basin is much less important. This has been a traditional US zone of influence both economically and politically. Despite the close relations between the English speaking Caribbean and the United Kingdom and EU involvement in the solution of the political crisis in Central America in the 1980s, EU trade and investment links with this region have not been significant.

 

The creation of free trade area between the USA and Mercosur, as part of a wider FTAA, could have affected the EU links with its most important partner in Latin America. Several economic studies agree that, at least in the first years after the creation of FTAA, a considerable expansion of US exports towards Latin America would have occurred. As the current tariff levels in the Latin America are higher than in the USA, a tariff reduction would cause an invasion of cheaper American products in the Latin American markets. Arguably, many European products would be displaced by these American exports. Similarly, the proposal of creating a FTAA is also a strategy in order to recover the predominant role of the US investments in Latin America. If FTAA will include an investment agreement between Latin America and the USA, the current increased European participation in this sector could be reversed. Therefore, the FTAA was a factor considered when the EU decided the new policy towards Latin America in the 1990s.

 

In other words, the EU has developed a dual approach strategy towards Latin America since the ’90,s. The cornerstone of this approach is the differentiation of countries or sub-regions according to their degree of trade and the weight of EU interests in their economies.

 

To a certain extent, the pattern of relations between the EU and Latin America has been modified after the last decade. The most important change was that the radical distinction between the political and the economic affairs was relatively replaced by a more coherent policy. The political cooperation has been maintained, as the continuity of the San José Process and the Annual Meeting between the EU and the Rio Group demonstrates. The EU has even deepened this cooperation by creating the bi-regional summits. The economic cooperation augmented and, arguably, it will be carrying on increasing in the following years. The European Investment Partner, AL-Invest, the free trade agreement with Mexico and the negotiations with Mercosur and Chile, were examples of this new EU interests in Latin America.

 

However much of the criticism states that the EU/Latin American bi-regional summits have been centered on politics and economics issues without paying attention to the social agenda and also that the EU has been mainly devoted to the widening of the integration process and the re-designing of the Transatlantic Dialogue with the US, putting aside the interregional relations with Latin America.

 

Nevertheless at the light of the ongoing global crisis when considering isolated the USA and the EU we cannot overlook some key relevant factors. At the beginning of the 1990s, there was no need to ask: Europe’s economic future was a subject of growing optimism. Today, the perspectives on the EU, and the outlook on its future, are radically different. Economic growth during the 1990s never became what many had wished for. Some countries performed reasonably well, most notably Ireland, but on the whole the EU was lagging far behind other countries during the whole decade. Productivity growth decreased and by mid-decade the EU was running behind the US in this respect. The process of convergence in productivity, a much talked-about process since the 1970s, had once again become a process of divergence.

 

The role, and status, of the EU in the economic reform process has also changed. Instead of a clear focus on economic reforms and growth, the EU (the Commission as well as the Council) has concentrated its ambitions on other political objectives. Hence, the EU no longer is – or is seen as – the great economic liberator of Europe. It is generally not performing as a vehicle for reforms, nor as leverage for policies that are needed but impossible to accomplish in the national political arenas.

 

The United States can play a strategic role in promoting economic freedom, stability, and growth in Latin America—something it has not done for nearly a decade. That means reversing the current policy characterized by bailouts, protectionist measures, and mixed messages to the region.

 

The rhetoric of free trade must be followed by policy actions consistent with such language. Congress should support a unilateral reduction of trade barriers to the region’s goods and negotiate free-trade agreements with countries eager to do so. The United States would thus highlight the success of market reformers in the region by rewarding them without penalizing others. The diverging performances of the countries that embrace economic freedom and the rest can have a powerful effect on the policy direction that Latin American countries subsequently take.