Euro-Latin American relations between the EU-Mercosur Agreement and The Ibero-American Summit

The current geopolitical situation, paradoxically, is very favorable for Latin America. Its significant reserves of rare earth elements and strategic minerals, abundant fossil fuels (gas and oil), and natural resources such as sun, wind, and water, coupled with its status as one of the world’s largest food producers, have led much of the world, starting with the major powers (the United States, China, India, and Russia), to pay it more attention than ever before.

Despite the global confrontation between China and the United States, which directly impacts the region, as evidenced by both the Trump Corollary to the Monroe Doctrine and Beijing’s significant presence throughout the continent, Latin American countries are in a position, as long as they do not get swept away by the current and the evident tug-of-war between both sides, to promote their own policies to take advantage of the moment intelligently.

The current geopolitical landscape is highly favorable for Latin America: amidst the confrontation between China and the United States, the region must drive its own policies rather than simply going with the flow

Currently, and not without some difficulty, regional governments are experimenting with dual policies, leaning towards the United States in security and defense and towards China in trade and investment. This does not imply either distancing themselves from one to automatically align with the other, or vice versa, but rather attempting to maintain a certain balance. This duality is most visible in South America, given that China is its main trading partner. The recent visits to Beijing by Ecuadorian President Daniel Noboa and Chilean Foreign Minister Francisco Pérez Mackenna attest to this.

But there are significant constraints. Their exports depend on the Chinese market, which is irreplaceable by the United States. Nor will American companies be able to easily replace Chinese investments, especially where the business calculations are not favorable. Despite this, the United States has drawn several vaguely defined red lines in sectors considered strategic due to their potential dual use (economic and security), such as telecommunications, cybersecurity, submarine cables, space technology, and certain key infrastructure (like ports).

With the exception of Brazil and Mexico, due to their size and economic potential, the other countries are unable to negotiate with any real guarantees with the superpowers and better defend their national interests. Despite the critical state of regional integration, intergovernmental cooperation, coordination, and collaboration (the 3 Cs) are more necessary than ever.

In this context, it would be desirable for the region’s governments to develop their own strategies toward China, something they are currently barely considering. If they do so, and if they clearly understand the objectives and particular interests of the two major powers, they could maintain a degree of initiative in the relationship, something that is currently lacking. This would make it easier to derisk the risks associated with each other’s demands in strategic sectors.

To gain a better foothold in the geopolitical arena, marked by uncertainty, the decline of multilateralism, and the Sino-American conflict, Latin America must diversify its political and economic alliances (trade and finance) with both old and new partners, such as the European Union, Canada, and India. This is precisely where the Mercosur-European Union Agreement and the 30th Ibero-American Summit in Madrid come in.

In a global context marked by uncertainty, Latin America and Europe need each other more than ever to diversify alliances, reduce risks, and consolidate a natural partnership.

The long-negotiated Mercosur Agreement presents a significant opportunity to boost intraregional trade. It is often described as a win-win situation. However, the Agreement offers other advantages. Through it, the EU now has free trade agreements with countries representing 95% of Latin America’s GDP, compared to 44% with the United States and 14% with China. In practice, as signatory countries harmonize their regulations, such as rules of origin, intraregional trade is poised for exponential growth.

The Ibero-American system, despite the challenges of an increasingly hostile global context, has demonstrated its resilience. This is not only because it has been able to rebuild itself after the failure of the Cuenca Summit, but also because it has successfully implemented various cooperation projects in areas such as cybersecurity and social security. Since seven of the fifteen associated observer countries are European (Germany, Belgium, France, Hungary, Italy, Luxembourg, and the Netherlands), plus Spain and Portugal, which are founding members along with Andorra, there is a significant EU presence in the Ibero-American system, and it would be desirable for this presence to increase even further.

At this moment, marked by tensions arising from diverse sources, some unimaginable just a few years ago, Latin America and Europe need each other more than ever. This has led the President of the European Commission, Ursula von der Leyen, to speak of a natural partnership. Following the path laid out by Canadian Prime Minister Mark Carney toward the convergence of middle powers, the Euro-Latin American relationship must be strengthened by fostering the most favorable advantages for all parties involved.