The EU neglected Latin America for a long period, but China, Russia, and India have filled the void. Can the partnership be rejuvenated?
In October 2023, Foreign Affairs had the title “The country forgotten by geopolitics”. It alluded to Latin America’s present periphery status, away from major geopolitical confrontations. As violence and instability spread from Ukraine to the Middle East to the South China Sea, the comparatively peaceful area finds itself on the periphery of global political events. This has advantages, but it also means that the region may miss out on economic possibilities and assistance that it sorely requires.
However, the geopolitical competition between the United States and the European Union, on the one hand, and China and Russia on the other, as well as the growing self-confidence of developing powers in the so-called Global South, have been more mirrored in Latin America in recent years. The European Union’s (EU) interest in Latin America has undergone a revival during the last two years: First, after an eight-year hiatus, the leaders of state and government of the EU and the Community of Latin American and Caribbean States (CELAC) reconvened in Brussels for a bi-regional summit in July 2023. The emphasis was on climate and the environment.
The EU also unveiled its EUR 45 billion investment plan for Latin America and the Caribbean as part of the Global Gateway Investment Agenda (GGIA). But the most significant and unexpected breakthrough in EU-Latin American ties came in early December 2024, when the EU-Mercosur Partnership Agreement was completed after 25 years of discussions. Once implemented, it would establish the world’s largest free trade zone, bringing together more than 700 million people from 32 countries and accounting for 20% of global economic activity and 31% of global merchandise exports.
The signing of the deal was made possible because the EU shown significant flexibility, for example, on environmental policy standards that it had previously refused to accept. In the present geopolitical climate, such as potential trade conflicts with the United States, trade and energy policy decoupling from Russia, de-risking from China, and Europe’s overall loss of political and economic weight, a partnership with South America has a symbolic impact. When the deal goes into effect, European products and services will become considerably more competitive in the massive Mercosur market, as will products from Mercosur nations Brazil, Argentina, Uruguay, Paraguay, and, beginning in 2024, Bolivia in the EU.
The emphasis is on “if” because the accord must now be approved by the EU Council, where France, Poland, Ireland, Austria, and the Netherlands may all vote against it. It must also be approved by both the European Parliament and national legislatures, which will be an additional obstacle. Even within Mercosur, unanimous acceptance is not guaranteed due to disputes between Brazil and Argentina.
The European Union has often described Latin America as a “natural partner” in its official political discourse. For instance, the New Agenda for EU-Latin America Relations from July 2023 emphasizes the unique historical, cultural, economic, and social bonds that unite the two regions, alongside their shared commitment to peace and multilateralism. However, this “natural partnership” narrative may partly explain the EU’s relative neglect of Latin America over the past decade, as the bloc has shifted its focus to other regions.
Germany, too, has overlooked Latin America for much of the last 15 years. Only recently, amidst the cascading global effects of Russia’s war on Ukraine, did Germany embark on a diplomatic initiative in the region. In the first half of 2023, Chancellor Olaf Scholz and Foreign Minister Annalena Baerbock visited Argentina, Brazil, Chile, Colombia, and Panama. Their agenda included rallying political support for Ukraine, exploring economic and energy partnerships, and fostering collaboration on climate and environmental issues. However, a cohesive, long-term German foreign policy strategy that recognizes Latin America’s growing self-confidence and evolving geopolitical significance remains absent.
The EU, facing global challenges from economic shifts to energy transitions, must now prioritize Latin America as part of its strategic framework. The Mercosur agreement, despite unresolved hurdles, represents a meaningful step forward. This renewed focus is critical as other global powers—particularly China—have significantly increased their presence in the region.
China’s Expanding Influence
Since the early 2000s, China has dramatically deepened its ties with Latin America. It is now the primary export market for countries like Brazil, Chile, Peru, Cuba, and Uruguay and ranks second for Argentina. Moreover, Latin America has emerged as China’s second-largest recipient of direct investment after Asia. Twenty-one Latin American and Caribbean nations have joined China’s Belt and Road Initiative, and several countries, including Chile, Peru, Costa Rica, and Ecuador, maintain free trade agreements with Beijing.
China’s growing influence extends beyond trade and investment. In recent years, President Xi Jinping used major summits in the region to unveil critical infrastructure projects, such as the Chinese-financed deep-water port of Chancay in Peru, and to forge closer economic ties with Brazil, exemplified by the signing of 37 bilateral agreements. This expanding presence underscores China’s strategic ambitions in the region, particularly in sectors like telecommunications and resource extraction.
Russia and India: Emerging Players
Russia, though less economically dominant than China, has carved out a niche in Latin America. Moscow has become a crucial supplier of fertilizers to Brazil and enjoys favorable trade balances with smaller nations like Ecuador, thanks to banana exports. Additionally, during the COVID-19 pandemic, both China and Russia capitalized on vaccine diplomacy to bolster their soft power, stepping in when Western nations were slow to share vaccines.
India, meanwhile, has quietly expanded its footprint in Latin America. Trade between India and the region reached $50 billion in 2022, a sharp increase from $1.6 billion in 2001. Indian External Affairs Minister Subrahmanyam Jaishankar’s diplomatic visits to eight Latin American countries since 2019 signal a renewed interest in the region. India’s focus on securing access to critical resources, such as lithium, aligns with its ambitions as a rising global power.
The Lithium Triangle and Geopolitical Competition
Latin America’s abundance of resources, particularly lithium, is attracting the attention of major and middle powers. The so-called lithium triangle—Argentina, Bolivia, and Chile—hosts some of the world’s largest lithium reserves, essential for battery production. China and Russia have plans to establish production facilities in Bolivia, while India is developing lithium projects in Argentina and exploring opportunities in Chile. This intensifying competition reflects the strategic importance of Latin America’s resources in the global energy transition.
The EU’s Role and the Path Forward
The EU remains a significant trading partner and investor in Latin America, but it is increasingly one among many. To maintain relevance, the EU must offer equitable partnerships that extend beyond the extraction of raw materials. The EU-Mercosur agreement exemplifies this by encouraging local value-added production and addressing the region’s aspirations for economic autonomy.
However, the geopolitical landscape in Latin America is evolving. Countries like Brazil, active in BRICS, and Argentina, with its pragmatic foreign policy adjustments, highlight the region’s shift toward a more balanced, multipolar approach to international relations. While external competition in Latin America is less contentious than in regions like Asia or the Middle East, careful diplomacy will be essential to sustain this relative stability.
In an era of heightened global competition, Latin America stands at a pivotal crossroads. For the EU and Germany, overcoming years of neglect will require a concerted effort to engage with the region in a manner that respects its growing geopolitical confidence and diverse partnerships.
The author Alexandra Sitenko is a German independent researcher.
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