Originally published on Euractiv under the title “In a global resource struggle, is the EU ready to take Latin America, Caribbean seriously?” in co-authoriship with Nicolás Meyer, Regional Coordinator of Caritas Latin America and Caribbean.
The EU-LAC summit should present a “new era of cooperation”, but for the partnership to be balanced, it must secure sufficient EU public financing, address material consumption in the EU, and support local economies and industrialisation in LAC.
The global struggle for critical raw materials from the global South is intensifying among major economies like China, the United States and Europe. In this reckless competition, the European Union (EU) aims to strengthen its relations with Latin America and the Caribbean (LAC) through a new, attractive offer. Therefore, the upcoming EU-LAC summit on 17-18 July is expected to present a “new era of cooperation” focused on renewable energies, strategic raw materials (in favour of the EU) and climate change adaptation (in favour of LAC). However, for the partnership to be balanced, it must secure sufficient EU public financing, address material consumption in the EU and support local economies and industrialisation in LAC.
EU’s bid: investments with principles
The EU’s agenda for its renewed relations with LAC largely focuses on the energy transition. Through the Global Gateway, the EU’s plan for major investments in infrastructure development, the block hopes to invest, together with the private sector, in critical raw materials value chains and in the production of green hydrogen.
However, private investments, trade facilitation and large-scale infrastructure and energy projects come with risks, which Caritas organisations in the region witness in their daily work.
“Contamination of water sources, deforestation, land grabbing and violation of indigenous peoples’ rights happen all too often in agriculture and mining,” explains Elizabeth Coca, Ecotheology Coordinator at Caritas Ecuador. Regarding the green transition she adds: “The ‘clean energy’ investors must apply corporate accountability rules; otherwise, they will simply perpetrate the same old biodiversity destruction and labour rights violations”.
But the EU claims to be making an attractive offer to LAC countries, especially in comparison with other global players such as China, through its commitment to “the highest social and environmental standards”.
Yet, while the EU is taking very concrete steps to respond to its own interests – such as planning to establish a “Critical Raw Materials Club”, signing a Critical Raw Materials agreement with Argentina, launching a Renewable Hydrogen Fund for Chile – the respect for human rights and environmental protection only come second. The EU’s upcoming Directive for corporate sustainability and due diligence seems to exempt the financial institutions from many obligations. This exemption is concerning, considering that the Global Gateway largely relies on financial institutions like development banks. As a result, these institutions might invest in companies involved in conflict mineral sourcing or support agricultural firms engaged in land grabbing without facing significant liability for such actions.
Three ingredients for a positive EU offer for LAC
First, the EU must put its money where its mouth is. What the EU seems to be offering is a narrative – about democratic values, decent jobs and nature preservation – that makes it the lesser evil in the geopolitical arena, but that lacks financial backing.
With other high-income countries, EU Member States have not been able to mobilise the US$ 100 billion per year in climate finance agreed in 2009. The EU has not provided enough debt cancellation or financing in the form of grants either, despite these being essential to free up LAC countries’ resources for climate action and social sectors. Moreover, the EU is yet to show that it takes southern actors’ concerns over the reform of international financial institutions seriously.
Second, the EU’s energy transition must not replicate the destructive model of the fossil fuel sector, increasing the extractive industry in LAC, primarily for the sake of meeting Europe’s taken-for-granted, ever-growing demand. It is time to address consumption in Europe and to question the mainstream development model; the EU’s offer to LAC will neither be “green” nor positive if it fails to tackle these root causes.
Third, LAC needs investments in models that enable its industrialisation and social progress. While export-oriented economies and foreign investments may support some social investments in the short- or mid-term, they are not capable of resolving structural factors of poverty and inequality. An energy transition that can benefit local communities will require transformed business models. The EU can have a more appealing selling point by supporting decentralised energy systems that enable communities to have more control over how energy is produced and distributed.
Different models are already functioning, such as the social and solidarity economy, which re-balances economic, social and environmental objectives and is promoted by Caritas worldwide. Latin America is one of the regions where the social economy has seen the greatest expansion, employing more than 13 million people, developing mutual support networks rooted in popular and informal economies (for example la Red Latinoamericana de Comercio Comunitario – RELACC), creating savings and credits systems and providing energy to millions of people. These economic forms shows that new solutions are out there, waiting for the chance to become politically viable.
The upcoming summit in Brussels can represent such a political opportunity, to raise the bar to higher social and environmental standards and to support the aspirations of LAC countries and people.
