Spain Pitches Closer EU-Latin America Ties

Welcome back to Foreign Policy’s Latin America Brief.

The highlights this week: Spain cozies up to Latin America at a summit in the Dominican Republic, a fire at a Mexican migrant detention center kills dozens, and the presidents of Ecuador and Peru face possible impeachment.

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The last time the European Union held a leaders’ summit with the Community of Latin American and Caribbean States (CELAC) was almost a decade ago, in 2015. In the intervening years, Latin America slipped down Europe’s foreign-policy priorities list as each region confronted its own set of challenges, officials on both sides of the Atlantic acknowledge.

Now, the leaders of Spain and Portugal, along with EU foreign-policy chief Josep Borrell—who is Spanish—say they want to cozy back up with Latin America. They spent last weekend in the Dominican Republic’s capital of Santo Domingo pitching a reset to regional leaders at an annual gathering known as the Ibero-American Summit.

Although the leaders of Spain and Portugal meet with their former colonies’ leaders in this forum every year, 2023 is “key” for rekindling broader Europe-Latin America relations, Borrell said. Spain will take over the rotating EU presidency in July, and Madrid has used that authority to prioritize an EU-CELAC summit scheduled to take place that month in Brussels.

Spain and Latin America have already grown closer due to the fallout from Russia’s invasion of Ukraine. Madrid has turned to Brazil and Mexico to replace Russian oil supplies and also wants the region to continue mostly voting against Moscow at the United Nations.

Borrell laid out another geopolitical argument for closer ties in Santo Domingo: As countries such as China and the United States move toward protectionism, Latin America and Europe should unite to show that “commercial relations are still a source of progress.” Borrell talked up trade deals that the EU is finalizing with Mexico, Chile, and the South American customs union Mercosur that are designed to include strong environmental and labor protections. Spain’s King Felipe VI, who was also present, said the EU was preparing to announce a round of direct investments in Latin American economies at the July EU-CELAC summit.

While such talk of trade and investment may seem like standard diplomatic fare, the new EU deals with Latin America are designed to respond to shifts in the global balance of power, Spanish international relations scholar José Antonio Sanahuja told Foreign Policy. Sanahuja directs a Spanish government foundation for public policy research and serves as a Latin America advisor to Borrell.

As the world increasingly moves in a bipolar direction, for both Europe and Latin America, “it leaves us in subaltern positions,” Sanahuja said. “It reduces our autonomy,” he added, and cooperating with each other is one way to get it back.

One way Europe and Latin America can collaborate is on green technologies, Sanahuja said. Countries around the world are racing to secure the raw materials needed to electrify cars and otherwise retrofit their economies. Many of those minerals—such as lithium and copper—are abundant in Latin America.

European countries in recent months have emphasized that their green tech cooperation with Latin America will ensure local jobs and development. A joint German-Chilean green hydrogen plant in southern Chile is one example; another is an unconventional provision negotiated in the draft Chile-EU trade agreement that allows Chile to sell some of its lithium at a discounted price to Chilean buyers so that the country can build up its domestic lithium industry.

Europe’s Latin America policy, Borrell said, should reflect the fact that “the circumstances of a well-off, middle-class European are not the same as the circumstances of someone who lives in the Bolivian or Colombian high plains.”

Europe also hopes to collaborate with Latin America more closely on tech regulation, Borrell said. Sanahuja said Latin Americans and Europeans “do not feel very well-represented by the state of regulation of the digital sphere in the United States”—where regulation is minimal—“or by the hyper-regulation of China, with extreme state control.” Europe has prioritized regulating new technologies and the market power of tech behemoths in recent years.

Without good regulation of emerging fields such as satellite technology, Sanahuja added, the world could see more conundrums of the sort unfolding in Ukraine, which is dependent on the use of Starlink satellite technology to fight Russia’s invasion, but one individual—SpaceX CEO Elon Musk—has disproportionate control over how it is used.

Europe seeks trustworthy partners to help set global standards on topics from trade to artificial intelligence, Sanahuja said. The recent political evolution of Europe’s traditional ally, the United States, has “posed a lot of questions to us in Europe. Imagine if a Republican wins the next presidential election and their policies change on issues like Ukraine,” he added.

Sanahuja’s and Borrell’s thinking appears to align with that of the new administration in Brazil—Latin America’s largest country and the region’s most important player in global affairs.

Celso Amorim, a top foreign affairs advisor to Brazilian President Luiz Inácio Lula da Silva, said in an interview with Metrópoles last year that Brazilian relations with Europe were “very important” in the path toward a multipolar rather than bipolar world. In Santo Domingo, Brazilian Foreign Minister Mauro Vieira said that “there is a clear contribution to be made by the Ibero-American region to the construction of a global order that is peaceful, dialogue-based, and reinforces multilateralism and the joint construction of multipolarity.”

All these apparent EU-Latin America synergies will first have to be finalized in trade and direct investment deals—which in some cases will depend on support from Latin American legislatures and an often divided EU membership. But Spanish Prime Minister Pedro Sánchez vowed to prioritize cooperation from his EU leadership seat. “This is not just talk,” he said.

Saturday, April 1, to Tuesday, April 4: Taiwanese President Tsai Ing-wen visits Guatemala and Belize.

Sunday, April 30: Paraguay holds general elections.

Mexico’s migrant tragedy. A fire at a government facility for migrants in northern Mexico on Monday killed 39 people, including men from Guatemala, Honduras, El Salvador, Venezuela, Colombia, and Ecuador, Mexico’s attorney general’s office said. A video leaked to the press appears to show guards walking away while migrants remained locked in their cells as the fire raged. It prompted outcry in Mexico, the home countries of the victims, and the United States about the conditions migrants face at government-run detention centers in Mexico.

Mexican President Andrés Manuel López Obrador said shortly after the disaster that detained migrants appeared to have started the blaze; as outrage over the incident grew, he added that it would be fully investigated and that those responsible would be punished. By Wednesday, Mexican authorities said that eight government employees or officials and one migrant were being investigated.

Many migrant rights advocates have argued that it’s not only the Mexican government that holds blame for the tragedy: “The U.S. bears responsibility for pushing these migrants back into Mexico to face unsafe conditions,” Immigration Hub’s Kerri Talbot tweeted.

Legal woes at the top. Ecuador’s top court greenlit impeachment proceedings against conservative President Guillermo Lasso on Wednesday. Lasso’s party holds a minority in the National Assembly, and opposition Indigenous groups as well as the opposition party of former leftist President Rafael Correa have sought Lasso’s impeachment on several different allegations of corruption.

Meanwhile in Peru, members of Congress plan to vote in the coming days about whether to open impeachment proceedings against President Dina Boluarte, who assumed office after President Pedro Castillo was impeached last December following an attempt to dissolve Congress. Public disapproval of Boluarte stems largely from security forces’ heavy-handed response to anti-government protests during her administration, and Congress would consider impeaching her on charges of being “morally unfit” for office.

Both efforts show that anti-incumbent sentiment is alive and well in the region.

María Kodama, the widow of Argentine writer Jorge Luis Borges, poses for a portrait at the Jorge Luis Borges Foundation in Buenos Aires on Nov. 28, 2018.LUDOVIC MARIN/AFP via Getty Images

Last literary wish. The March 26 death of María Kodama, the widow of Argentine writer Jorge Luis Borges, means the physical archive of Borges’s work might now leave Argentina and be scattered at research centers around the world, O Globo’s Janaína Figueredo wrote this week.

Kodama—a translator, literature professor, and writer—dedicated the years since Borges’s 1986 death largely to promoting his work. But she had a strained relationship with some in Argentina’s literary establishment over lawsuits surrounding his writing; Borges’s biographer said Kodama’s marriage to Borges at the Paraguayan consulate in Geneva shortly before his 1986 death was illegitimate.

After his death, Kodama became Borges’s heir and literary executor. Her dying wish was for most of his works to be available to overseas researchers and readers, Figueredo wrote. This week, Argentines celebrated Kodama’s work safeguarding Borges’s legacy on social media and celebrated her own career, TELAM wrote.

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A man walks by Argentina’s central bank in Buenos Aires on July 4, 2022.Tomas Cuesta/Getty Images

Chinese state banks are major lenders in Latin America and in developing countries around the world. But the details of Beijing’s loans are notoriously opaque; understanding how they compare to loans from the World Bank or other bilateral lenders has often only been possible through detective work by researchers.

Two studies released this week shed new light on how China has acted to bail out distressed borrowers globally and how its lending for development projects in Latin America in particular evolved in 2022.

The first study—a collaboration by researchers at the AidData lab at William & Mary, the World Bank, Harvard University, and the Kiel Institute for the World Economy—looked at how Chinese banks behaved over the past two decades when borrower countries appeared unlikely to pay back their loans.

During that period—and especially in the wake of the COVID-19 shock—China bailed out debtor countries by issuing them either new loans or currency swap lines, when China deposits its own currency, the yuan, into the central bank reserves of another country in exchange for its currency. (The U.S. Federal Reserve uses dollar swap lines to support central banks in mostly rich countries during financial crises.)

These two types of Chinese bailouts would theoretically reduce countries’ need to go to other lenders like the International Monetary Fund (IMF) to seek an emergency relief. China, unlike the IMF, does not require borrower countries to implement austerity policies. During the timeframe examined in the AidData paper, however, Beijing used higher interest rates on its bailout loans than did the IMF.

Argentina was one of the biggest beneficiaries of China’s swap lines documented in the AidData study. By December 2021, around half of Buenos Aires’s foreign currency reserves were in yuan. Future research could use this data to answer more qualitative questions, such as how Chinese bailouts affected Argentina’s economic management.

Altogether, the findings show that the global financial system is “becoming more multipolar, less institutionalized, and less transparent,” study co-author Christoph Trebesch told AidData’s Alex Wooley in a blog post. “We see clear historical parallels to when the [U.S.] started its rise as a global financial power,” he added.

Though Beijing’s state banks have issued far fewer new loans for Latin American development projects since the pandemic began than they did before it, they in 2022 financed three projects for Brazil, Barbados, and Guyana, another new report from the Inter-American Dialogue and the Boston University Global Development Policy Center showed.

Both the Barbados and Guyana projects are related to climate adaptation, and the new loans came after China said it would adjust its overseas development lending to favor environmental sustainability, study co-author Rebecca Ray wrote in Dialogo Chino. Going forward, China’s promises about green lending should also be monitored by researchers, she wrote, because “how the projects are planned and managed is as important for sustainability as what type of project is planned.”