Latin America looks East and West

The United States’ vacillating response to unfolding events in Venezuela is just another reflection of the traditional difficulties that beset US policy in the region: there is a lack of new ideas. The European Union, for its part, is mired in an economic crisis that prevents it from seeing anything beyond its own borders, and lacks a coherent common foreign policy; its ties to Latin America are reduced to development aid programs and a few specific trade agreements that leave out emerging powers like Brazil.

While some of the most brilliant minds in the US have spent decades dealing with the Middle East and the war on terrorism, it is quite difficult to recall the last time a US government articulated a convincing vision of its Latin American neighbors. Meanwhile, Brussels is still mulling a possible free-trade agreement with MERCOSUR - a negotiation that’s been underway since the mid-1990s – which would create a market of over 700 million people.

For over a century, Latin America was the satellite of a world whose epicenter was occupied by the US and Europe. The region was a tapestry of contrasts between the cosmopolitan cities and a backward countryside. The internal warfare and social conflicts that shook Latin America during the Cold War were part of that world whose center ran down the Atlantic Ocean, and whose shape was delineated by the battle between Western democratic capitalism and a westernized version of communism.

However, in less than a generation, the “globalization” of Latin America has changed every one of these attitudes. Since most of Latin America plays a dynamic role in the world economy and has jumped on the bandwagon of the telecom and Internet revolutions, it can be safely stated that none of the partners to the south are out of the game. These days, a Colombian immigrant in Madrid can be in touch with his family in Barranquilla every day with a prepaid cellphone, and an Ecuadorian immigrant in Barcelona can send money to his mother or have a video chat with his daughter in Guayaquil on a daily basis. The existing dichotomy between those who are addicted to modernity and those who are lagging behind is disappearing, even if the underlying inequality remains.

Diversification is a good safety net to cushion possible falls due to external and internal recessions

Besides this “Smartphone-Facebook-Twitter” revolution, the region’s immersion in the “Pacific Community” has changed the focus of Latin American leaders’ attention. New trade patterns with China and the Asian countries have revived the boom for raw materials. Latin America is currently the second most important recipient, after Europe, of Chinese foreign investment, and the Asian country in turn is among Latin America’s main export destinations. Yet the “re-primarization” of the economy could bring problems to the region, which is dependent on Chinese growth and price changes in these natural resources; Latin America’s strategy of trade diversification and increased exports of products with greater aggregate value could be weakened as a result.

Although the growing Pacific economy represents new opportunities for Latin America, the region should not ignore the opportunities to be found in Europe. In this sense, the possibility of a free trade agreement between the EU and the US could create an important framework for transatlantic relations: the agreement would not only encourage economic growth for both powers, it could also force emerging markets to return to the negotiating table at Doha – Brazil, China and India torpedoed a possible deal in 2008 and set a new tone and a new pattern of negotiation among equals on matters of world trade rules.

In a very similar fashion to the US, the European Union has free-trade agreements with Mexico, Canada, Colombia, Peru, South Korea, Australia and Chile, and is currently closing bilateral deals with Singapore, Malaysia, Vietnam and Japan – all of which are potential members of the Trans-Pacific Partnership. In this sense, an EU-US trade agreement could create a transatlantic framework in which to unify all the free-trade agreements that the EU and the US have in common. Walking down this road would prove that the transatlantic relationship is evolving and it would enable Washington and Brussels to develop a new type of broader association among equals, far removed from the previous framework which is narrow and outdated.

Latin America should not struggle between East and West. Both shores offer valuable opportunities for remaining on the current path of growth. The key lies in diversification as a good safety net to cushion possible falls due to external and internal recessions. In this equation, the European Union and the US must not forget that Latin America has ceased to be an interchangeable element, and has instead become a key factor in the end result.

Carl Meacham is director of the Americas Program at the Center for Strategic and International Studies (CSIS).