Latin America & the Caribbean

Introduction

Europe has age-old links to Latin America. Many of our countrymen have travelled to this part of the world ever since the 16th century, resulting in an entire network of relationships at cultural, political and economic levels. This has led to an affinity that overcomes geographic distances.

We are above all bound by our common socio-cultural and humanistic values, which should actually create a fruitful foundation for cooperation and partnership. In real politics such was, however, quite different, with the result that the continent has had difficulty freeing itself from the grip of ‘caudillismo’, populism and nationalism. During the dark years of the most recent wave of dictatorships, a strong commitment to human rights and democracy was expressed by Belgium and, more generally, by the West. As the overall political situation has improved and the economic environment has evolved accordingly, we have unfortunately been unable to take sufficient advantage of the major opportunities offered by the region. The problem is not an under-representation - to this day the EU is the second-largest trading partner (and number one in trade in services) and remains the biggest investor (approximately 40%) and largest donor in Latin America and the Caribbean - but in absolute figures this presence can for sure be improved. We are therefore more and more concentrating on “strategic partnerships”. By doing so, we are abandoning our still somewhat “paternalistic” image of donors of development aid and providers of trade facilities. With a number of politicians and even captains of industry in certain countries we still notice a rather defensive attitude towards the European commercial and economic potential. Luckily this is balanced by a more open attitude towards trade with and  investment in Europe in a number of other countries of the region.

The Latin American and Caribbean continent is indeed anything but homogeneous. A rather loose confederation of nations now exists for the first time, thanks to the newly-created CELAC (Community of Latin American and Caribbean States), an organisation founded in Caracas in late 2011 in which all countries participate. There are several regional blocs as well (UNASUR, MERCOSUR, SICA, ALBA, CARICOM….), not a single one of which has developed a well-integrated personality of its own (a basis for a common market). Thus an important potential to achieve genuine and sound socio-economic progress has been left idle. Recent decades have witnessed great political and economic strides: the debt crisis was overcome, robust growth has made a comeback, and the middle class has grown visibly. Yet major challenges remain, primary among them the still considerable social inequality, the inadequate educational system and the major gaps in infrastructure.

From the standpoint of both Europe as well as Belgium, there is definitely still room for a more active policy vis-à-vis Latin America and the Caribbean. The Eurozone crisis has given Latinos the impression that we are too self-absorbed. There is room for diversification in our capital investments; these have on the one hand been heavily directed at services, and have otherwise been channelled towards energy, telecom and to some extent infrastructure. These investments have not always had a significant social impact either. The same can be said for our cooperation in the areas of science, technology and innovation - here too there is more that can be done. And last but not least, both Europe and Belgium are looking forward to more investment from Latin America as well as a somewhat less unilateral flow of trade (still too heavily dominated by commodities).

Our diplomatic network in Latin America and the Caribbean includes, starting September 1, 2013 nine embassies, two consulates-general and one diplomatic bureau. In most instances, an embassy’s jurisdiction encompasses more than one country: Mexico City is in charge of Mexico and Belize; Panama City serves all six Central American countries; Havana does Cuba; Kingston takes care of the vast majority of the Caribbean; Caracas will turn into a diplomatic bureau from September 1, 2013 onwards, serving Venezuela, but under Bogota, which apart from Colombia and Venezuela, will also have the Dutch Antilles in its jurisdiction. Lima is in charge of Peru, Ecuador and Bolivia; Santiago of Chile; Brasilia of Brazil; finally Buenos Aires serves Argentina, Paraguay and Uruguay. The two consulates-general are located in Brazil: in Rio de Janeiro and Sao Paulo.

Although they are not equally represented throughout the continent, the three regions of Belgium also maintain a presence here: Flanders Investment and Trade (FIT), AWEX (Walloon Export and Foreign Investment Agency) and BIE (Brussels Investment and Export). The French-speaking Community of Belgium maintains an office in Santiago de Chile and a representative for scientific cooperation in Sao Paulo.

The most significant bilateral contacts over the course of the past decade were without doubt through the economic delegations led by Prince Philippe to Brazil (twice in the last five years), Chile (twice in the last ten years), Argentina, Uruguay, Mexico and Panama. The Minister for Foreign Affairs has also visited several countries in the region in recent years.

1. Middle America and the Caribbean

This region consists of as many as 21 nation-states, most ranging in size from small to very small (Caribbean island states).

By far the largest country in this region is Mexico, with more than 110 million inhabitants. The Belgian presence here dates back to the 16th century (education reformer Pedro de Gante). Several Belgian firms have operations here, it is home to a modest-sized Belgian community, and we are Mexico’s seventh-largest trading partner among EU Member States. Our two countries maintain active cultural (regular exhibitions) and scientific ties (there is an institute for Mexican studies at the University of Antwerp). The area comprising the Central American countries - with more than 40 million inhabitants and almost a thousand countrymen - makes for a small and rather lopsided trading partner (Belgian machinery versus agricultural products, with a trade deficit). Panama is our largest trading partner in the region, accounting for 37% of export trade volume. Belgian companies are primarily engaged in infrastructure works (including the upgrading of the Panama Canal, to be completed by 2015). These countries are among the poorest on the continent and also suffer greatly from the effects of violent drug-related crime. Belgian development cooperation remains in place through the presence of several Belgian NGOs. Further economic stimulus is anticipated for this region, stemming from the association agreement between Central America and the EU that went into effect on a provisional basis in the Fall of 2013 (the trade component).

The Caribbean. Though it is not a focus country for development cooperation, Haiti has become a focus country for assistance in the wake of the destructive earthquake in January 2010 (more than €10 million in emergency relief and about €20 million in short-term reconstruction aid). We are also contributing to the UN’s MINUSTAH mission. Cuba is a traditional partner country of NGOs and of our federated entities. As the last communist bastion in the Western hemisphere, it plays a political role that is by no means insignificant while ‘gradually’ adjusting to a set of altered geopolitical realities. Belgium is taking a constructive lead on this issue within the EU. Jamaica (the seat of our Caribbean embassy) maintains an economic significance (transport, Jonckheere buses) and a potential for infrastructure works, while Trinidad and Tobago offers prospects for renewable energy.

2. South America

This continent is comprised of 12 nations, amongst them the most important ones.

Venezuela experienced a change of president in the April 2013 elections, this after the demise of the charismatic Hugo Chavez. The new chavista leader, Nicolas Maduro, did however not get a clear mandate and the political transition presents itself as difficult. Chavez’ social programs may have made Venezuela the most egalitarian society in Latin America, but Maduro inherits a country with considerable deficiencies in democracy and good governance. Oil remains the main source of state revenue, but has not provided for the necessary economic development. The Andean Countries. Three of the four (Peru, Bolivia and Ecuador) are focus countries, and development cooperation is therefore the main driving force behind our bilateral relationships. Poverty is on the decline in absolute terms, with these three countries all showing good growth numbers.  Ecuador and Bolivia both have regimes engaging in a substantial degree of state intervention. Peru and Columbia take a more liberal approach. The latter have signed and also ratified a ‘multi-party’ free trade agreement with the EU, that has provisionally entered into force  (trade part). Colombia has the most attractive business climate, but continues to be plagued by an internal armed conflict that has been lasting for more than 50 years (which over time has led to crime – especially drug related - mixing in with ideology)  President Santos is presently undertaking a renewed effort to reach an overall peace-agreement with the FARC (Havana talks). Chile is our third-largest trade partner in the region (Belgium is furthermore its first investment destination in the EU) and enjoys an open business climate. It has an association agreement with the EU since 2005. Since the Summer of 2012, Mexico, Colombia, Peru and Chili form the “Alianza del Pacifico, a loose trading block, that aims at as much free trade as possible between its members (already linked by bilateral FTA’s). The alliance is open for other “like minded” LA countries to join.

We maintain good relations with the two smaller MERCOSUR countries, Paraguay and Uruguay. Uruguay in particular stands out as a model of economic cooperation: logistics (Katoen Natie) and infrastructure. Relations with the much larger Argentina have more recently been complicated by increasing protectionism  There has been less protectionism in the region’s largest country, Brazil, though it has still been unable to genuinely tap its potential because of the custo Brasil - the various obstacles to doing business there. This Latin giant, with almost 200 million inhabitants and the most significant Belgian community in Latin America, is host to nearly a 100 Belgian firms and reports strong trade figures with Belgium ( slightly over €5 billion in bilateral trade in 2012). Belgium maintains a solid presence in Brazil, all the more given that we are the third-largest investor here at the global level (AB Inbev….). Belgium’s potential lies e.g. in infrastructure works (with additional opportunities springing from the World Cup Football and the Olympic Games), port facilities, waterways, aeronautics, space, and energy (both nuclear and green). Our scientific and technological cooperation has received a boost by a number of  recent agreements between Brazilian and French-speaking/Flemish higher education authorities.

Negotiations on an association agreement have been carried out for quite a while now between MERCOSUR and the EU and are not running smoothly. The sudden change of presidency in Paraguay in 2012 (and its consequent suspension from the trading block) together with the simultaneous entrance of Venezuela into MERCOSUR, complicated this process even more. The election of a new president in Paraguay in August 2013 opened the door for its readmission to MERCOSUR. Protectionist tendencies, however, are not really subsiding, on the contrary, not auguring well for the conclusion of such an agreement.