AFTER THE SPANISH EU PRESIDENCY: looking TOWARDS A NEW LATIN AMERICA-EU PARTNERSHIP?

Summer 2010

With the support of: Media Partner

Latin_America_EU_partnership_cover_17-08-10.indd 3 31/08/10 07:16

AFTER THE SPANISH EU PRESIDENCY: TOWARDS A NEW LATIN AMERICA-EU PARTNERSHIP?

Report of the high-level European Policy Summit co-organised by Friends of Europe, Telefónica and Real Instituto Elcano

with the support of Enel and Endesa

with media partner Europe’s World

Summer 2010 Concert Noble, Brussels The views expressed in this report are the private views of individuals and are not necessarily the views of the organisations they represent, nor of Friends of Europe, its Board of Trustees, members and partners.

Reproduction in whole or in part is permitted, provided that full credit is given to Friends of Europe, and provided that any such reproduction, whether in whole or in part, is not sold unless incorporated in other works.

Rapporteur: Mike Scott Publisher: Geert Cami Project Director: Nathalie Furrer Project Executive: Maximilian Rech Photographer: Frédéric Remouchamps Layout: Nicolas Bernier

This report is printed on sustainably produced paper. Table of contents

EXECUTIVE SUMMARY 4

SESSION I: Taking the lead: Where next for trade and investment links? 7 Political will 9 Integration agenda 11 Engine for growth 13 From problem to solution 16

SESSION II: Seizing the potential: What strategy for EU-Latin American energy relations? 19 Technology transfer 21 Policy changes 25 Lessons to be learnt 28

SESSION III: Strengthening the ties: What should be the EU’s Latin American priorities? 31 Losing ground 32 Global architecture 33 Barriers to growth 35 Ideological divide 36 Otherwise engaged 39

ANNEX I - Programme 40

ANNEX II - List of Participants 45 4 After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010

EXECUTIVE SUMMARY

Latin America was one of the themes of Spain’s recent EU Presidency and Madrid successfully concluded a number of deals with the region, Friends of Europe’s Latin America summit heard.

As well as sealing agreements with Central America, Peru and Colombia, the EU also saw the revival of talks with Mercosur that have been on hold for six years, said Juan Pablo De Laiglesia y González de Peredo, Spain’s State Secretary for Latin America. The Spanish approach was to foster greater political and economic co-operation between the EU and Latin America, to encourage greater integration within the region and to address the needs of Caribbean countries.

It was widely agreed that the EU needs to strengthen its links with a region that has come through the financial crisis in good shape and that is going to be one of the main engines of growth in years to come. But it is only when Spain holds the EU Presidency that the region gets the focus it deserves, despite being home to more than 1bn people and 30% of the world’s GDP, noted Sandra Fuentes-Berain, Mexico’s Ambassador to the EU.

Economically, the Mercosur talks should be the most significant achievement, and it is important for the EU because the members of Mercosur are thriving economies that are developing quickly, said EU Commissioner for Trade Karel De Gucht. However, concluding an agreement will not be easy, not least because of the extreme sensitivity of the subject of agriculture to both blocs.

Telefónica’s Carlos López Blanco said the business community hopes the deals will lead to a more open trading regime, transparent rules of the game and a more secure environment for investment.

Latin America’s recent growth is symptomatic of the shift in the economic balance of power to emerging markets. These markets are going to be even more important to future growth, which makes it crucial for the EU to deepen its ties to the region.

One reason for the region’s confidence is its experience of emerging from a period of instability and stagnation, explained Henrique de Campos Meirelles, Brazil’s Central After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 5

Bank Governor. This experience could be useful to EU countries experiencing similar problems, while the Latin American success story also has lessons for other EU priorities such as Africa, said the World Bank’s Augusto de la Torre.

One of the key requirements for Latin America to continue its growth is secure energy supplies in a low-carbon world. Here the continent has unique advantages in its vast hydro power potential and Brazil’s world-leading ethanol industry.

However, the EU is in danger of failing to capitalize on this natural area of co-operation because this situation is far-removed from the EU’s low-carbon paradigm, which virtually ignores hydro because most of Europe’s hydro potential has been tapped. The EU is also in danger of losing out on the benefits of Latin American biofuel supplies, which could help it to meet its renewable fuel obligations, because of sustainability criteria that are so restrictive they make it impossible to import to Europe, said Markku Nurmi of Finland’s Environment Ministry.

There is also huge potential in other renewable technologies, most obviously wind, solar and energy efficiency, and the EU can help with technology transfer and funding through the Copenhagen Accord, said Endesa’s José María Calvo-Sotelo.

Energy is one of the key areas where EU experience in integrating and deregulating markets could help Latin America, said Eurasia Group’s Will Pearson. The EU experience of integration is a key competitive advantage in dealing with a region as diverse as Latin America, the UN’s Osvaldo Rosales pointed out.

EU companies would be able to invest more in Latin America if local capital markets were better developed and more local currency debt instruments were available, emphasised Francisco de Paula Coelho of the European Investment Bank. Such moves would also help to put the excess domestic savings of these countries to better use locally.

If Europe is to strengthen ties with Latin America, it needs to take seriously the talk of strategic partnership and acknowledge the shortcomings of its own single market, said Charles Powell of the Real Instituto Elcano. There is a unique opportunity for the EU to deepen its links with a region with which it has much in common, but Brussels must build on the good work done by Spain and not allow relations to be neglected again.

After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 7

SESSION I Taking the lead: Where next for trade and investment links?

In the dying days of the Spanish EU Presidency, Friends of Europe’s Latin America summit opened with Secretary General Giles Merritt’s remark that Brussels has been very slow to focus on the opportunities that partnerships with Latin America offer, not just commercially but in the political and development spheres. It is only when Madrid is in the chair that the region gets the attention it deserves, he added.

This is odd, said Sandra Fuentes-Berain, Ambassador and Head of the Mission of Mexico to the EU, given that Latin America and the Caribbean are home to more than 1bn people, more than 30% of the world’s GDP and hosts one third of UN member states and one third of the G20 members.

In a keynote speech, Juan Pablo de Laiglesia y González de Peredo, State Secretary for Latin America at the Ministry of Foreign Affairs of Spain, highlighted Madrid’s achievements on EU policy towards Latin America, following a commitment to reinforce relationships with Latin America.

“The Madrid summit focused on just two items on the global agenda – the financial crisis and the global financial architecture that will allow us to get through this crisis.”

Juan Pablo de Laiglesia y González de Peredo, State Secretary for Latin America at the Ministry of Foreign Affairs of Spain

Spain’s attempt to move forward relations took place on four levels, he added. Firstly, it wanted to deepen bi-regional relations because “we both face global 8 After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010

issues”. As a result, the recent Madrid summit focused on just two items on the global agenda – “the financial crisis and the global financial architecture that will allow us to get through this crisis.”

The summit established a a3bn Latin America investment facility and concluded negotiations on an agreement with Central America, the EU’s first such regional deal. Despite a boycott of an agreement with the Andean Community by Bolivia and Venezuela, Madrid also managed to seal a deal with Peru and Colombia, with Ecuador now in talks to get involved as well. The summit also came up with a new strategy for relationships with the Caribbean countries, “which have a level of needs that the EU can help to address.”

The EU and Latin America have a long-standing relationship based on strong economic, political and cultural ties that stretch back centuries, pointed out Karel De Gucht, EU Commissioner for Trade.

The Madrid Summit was a significant step in upgrading the framework of relationships between the two blocs. “The goal is to move from a lack of stability to an environment of predictability and legal certainty; from one-sided dependence to true partnerships.”

“The goal is to move from a lack of stability to an environment of predictability and legal certainty; from one-sided dependence to true partnerships.”

Karel De Gucht, EU Commissioner for Trade

As well as the bilateral agreements, the Spanish EU Presidency also saw the resumption of negotiations for an association agreement with Mercosur that have lain dormant for six years, he said. “The members of Mercosur are thriving economies that are developing quickly.” After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 9

However, he added, “we should not underestimate the problems with negotiating this deal. It is not an accident that these talks were suspended in 2004.” While new talks will inevitably bring the agricultural sector to the foreground, the commercial flows between the EU and Mercosur go far beyond trade on goods: the EU is the largest exporter of services to Mercosur and also the largest investor “EU’s investments in Mercosur add up more than EU’s investments in Russia, China and India, altogether.”

Political will Nonetheless, “informal contacts have led to offers from Mercosur that motivated the EU to relaunch the talks and given us serious hope that we can get a substantial free trade agreement. Ultimately, the level of ambition depends on political will both in Mercosur and in the EU.”

Most exports from the region are raw materials or primary products and the new agreements “will help diversify Latin American exports in processed agricultural products and manufactured goods.”

However, Mexico, which has trade agreements both with the EU and the U.S. and Canada, is an exception to this rule – it exports mainly manufactured goods, said Fuentes-Berain.

Ambassador Fuentes emphasized that Mexico was the first country in the Latin- American region to sign a free trade agreement with the EU in 2000. The treaty has been beneficial for both sides, since bilateral trade and investment flows increased by 120% to reach an absolute value of $41bn in 2009, while Mexican exports to Europe increased by 160% over the last decade.

Mexico also profited from foreign direct investment, since the EU has invested more than $80bn over the last ten years, which represents one third of all foreign direct investment received. Indeed, last year the EU invested more in the country than the U.S. did. The EU agreement has helped Mexico “to be a real partner to Europe.”

Bilateral relations continue to improve and Mexico and the EU recently established a Strategic Partnership, strengthening economic and commercial ties as well as fostering dialogue and cooperation on bilateral, regional, and multilateral negotiations. 10 After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010

The Mexican diplomat also reiterated Mexico’s commitment to a clean environment, ephasised by Mexico hosting the UN Climate Change Conference (COP 16) this year and creating the conditions for investments in renewable energies. For Mexico, the political aspects of the agreement are as important as the free trade chapter.

“Latin America and the Caribbean are home to more than 1bn people, more than 30% of the world’s GDP and hosts one third of UN member states and one third of the G20 members.”

Sandra Fuentes-Berain, Ambassador and Head of the Mission of Mexico to the EU

It is crucial that the EU helps Latin America to move on from being just a provider of raw materials to become an exporter of added value products. “You must help these countries to have the same profile as Mexico,” said the ambassador.

“The agreement signed with Mercosur should lead to similarly significant new investment opportunities for business,” said De Gucht. The initiative will also address non-trade barriers by encouraging regulatory convergence to ensure both sides are playing by the same rules.

Trade has increased by more than 45% in recent years, a significantly higher rate of growth than with other trading partners, and it is not limited to goods, the Commissioner said. The EU is a major exporter of services to Latin America, garnering sales of e28bn in 2008 alone, while the total stock of EU investment in the region – at e165bn – is more than it has invested in China, India and Russia put together. This trade is not just one-way – Brazil alone has invested e10bn in the EU, De Gucht said. “Investment is a crucial element of our partnership with Latin America.”

One might ask if this is consistent with the EU’s aim of making the Doha Development Agenda its top priority, De Gucht suggested. “We continue to privilege the multilateral negotiations framework for efficiency and systemic After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 11

reasons, but the absence of progress and the lack of engagement with certain partners has called for complementary actions with partners who want to open up trade and investment with us.”

Integration agenda Focusing on the regional dimension is consistent with the EU’s overarching policy of furthering integration in the region, he continued. “Integrating markets will help to attract the necessary investment and boost trade between our regions. The conclusion of the trade deals and the relaunch of the Mercosur talks have radically improved trade and investment opportunities between the two regions.”

The region is already taking tentative steps towards integration, Fuentes pointed out, while Lourdes Casanova, Lecturer for Corporate Management at INSEAD emphasised that in February, Mexico hosted a summit of Latin American and Caribbean countries where, for the first time, neither the U.S. or the EU were invited.

“Latin American countries are still knocking on Europe’s door – they are still tied for historical reasons of immigration, language, investment flows and trade links. But for how long? And if we do not act to strengthen the relationship with them, we risk becoming irrelevant.”

Lourdes Casanova, Lecturer for Corporate Management at INSEAD

Business has welcomed the bilateral agreements and the relaunch of the Mercosur talks, said Carlos López Blanco, Director of the International Office of Telefónica and former Spanish State Secretary for Telecommunications and Information Society. “The business community expects three outcomes from these deals – an open trading regime, transparent rules of the game and security for our investments.” 12 After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010

However, since the ratification of the Lisbon Treaty, all treaty deals must be ratified by the European Parliament, said De Gucht. “Parliament takes this task very seriously and we are going to face in-depth discussions especially in relation to the rights of trade unionists in Colombia. However, I believe that stability and the further development of democracy in Colombia will be best served by a free trade deal with the country.”

China is set to overtake the EU as Latin America’s second-biggest trading partner in the next few years, said Blanco, whose company is the largest European investor in the region. However, Europe has one advantage over China and the U.S. – its strong cultural, historical and linguistic ties with Latin America. “Latin American countries are still knocking on Europe’s door – they are still tied for historical reasons of immigration, language, investment flows and trade links,” Casanova added. “But for how long? They are open to the rest of the world and we risk becoming irrelevant.”

The financial crisis has accelerated the shift from the developed world to emerging markets, said Blanco. While the world economy contracted more than 1% in 2009, Latin America not only recorded growth but also displayed a resilience that took the region out of the financial crisis more quickly than the developed world. As the recovery gathers pace, emerging markets will be key to further growth and this makes them more attractive to investors than traditional advanced economies.

“The policymakers look at Asia and other parts of the world but not Latin America and that is a big, big mistake. It is a short-sighted approach by the EU. We see a lack of compromise and commitment in EU foreign policy.”

Carlos López Blanco, Director of the International Office of Telefónica and former Spanish State Secretary for Telecommunications and Information Society

“According to the OECD, the risk of investing in Brazil is lower than investing in Portugal, while investing in the U.S. or the UK is more risky than doing After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 13

Mexican Ambassador Sandra Fuentes with Carlos López Blanco of Telefónica and Charles Powell of Real Instituto Elcano

business in Chile or Brazil,” said Blanco. This is reflected in the market value of emerging market companies, with two of the largest energy companies – Vale and Petrobras – based in Brazil and the country’s Banco Itau now rivalling Goldman Sachs in size.

Engine for growth The region has been key to Telefónica’s growth, Blanco pointed out. During the worst financial crisis in living memory, two of the countries the company invests in – Peru and Colombia – achieved investment grade status, joining Brazil and Mexico. The region’s economic growth has fed through to the general population, with GDP per capita growing by 39% and unemployment falling from 11% to 7.5%. “From 2002 to 2009, the amount of people in poverty fell by 50m people – that’s the equivalent of the population of Spain.” For the first time, the number of people classified as high- or middle-income exceeds the number in poverty.

After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 15

Information and Communication Technology (ICT) has been a crucial element in the region’s development, Blanco added, with only 56% of the population having mobile access four years ago and 10% having access to broadband. Now mobile penetration is more than 90% and 25% of the population has broadband access, with a number of countries in the region having better mobile penetration than the U.S.

With a 10% increase in broadband penetration equating to a 1.4% increase in GDP according to the World Bank, “the rise in the information society has had a very positive spillover effect on economic and social development.” ICT is helping the continent to meet challenges in health, education and financial services, Blanco added.

Crucially for a continent still suffering a great deal of poverty, much of the continent’s innovation has a social element, said Casanova. “There are plenty of entrepreneurs with an eye on profit but also with an eye on contributing to society.” Recycla Chile, for example, employs disabled people to recycle electronic waste. There are also numerous examples of institutional innovation throughout the continent, with Finep, Brazil’s Innovation Agency, highlighted by the G20 as a model that should be replicated in other emerging markets.

Brazil is also a global leader in biofuels as a result of policies developed following the first oil crisis of the 1970s. It is in this arena that the benefits of co-operation between Europe and Latin America are most evident – the first flex-fuel car, able to run on both gasoline and ethanol – was developed in Brazil, by Germany’s VW, she added. More such co-operation is needed and “we need signs of urgency because this collaboration can only help us – and both continents can benefit.”

The continent’s smaller nations should not be forgotten, asserted the Costa Rican Ambassador to the EU, who pointed out that his country’s biggest export is microchips, while Ecuador is a major manufacturing centre for Airbus. “The panel is very focused on the big numbers, the big markets. What about the small markets that are very dynamic?” asked Ambassador Roberto Echandi Gurdian.

Yet Latin America remains far from the top of Europe’s foreign policy agenda. “It is a political problem,” said Blanco. “The policymakers look at Asia and other parts of the world but not Latin America and that is a big, big mistake. It is a short- sighted approach by the EU. We see a lack of compromise and commitment in EU foreign policy.” 16 After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010

From problem to solution To understand how Latin America has moved, within 25-30 years, from being a problem area to being a model of growth and innovation, it is important to take a historical perspective, said Henrique de Campos Meirelles, Governor of the Central Bank of Brazil. “To understand why Latin American countries have moved from crisis-bound countries to being a crisis resilient area, you have to understand how it became a problem area in the first place.”

“As a result of the banking crisis of the 1990s, we learnt our lesson. Most of the measures proposed by the Basel Committee are already in place.”

Henrique de Campos Meirelles, Governor of the Central Bank of Brazil

The case of Brazil may shed some light on the broader picture of Latin America. From 1870 to 1970, Brazil had one of the highest growth rates in the world, initially a commodity-driven growth fuelled by a massive influx of skilled manpower from Europe. The two world wars helped Brazil to develop its own industrial sector as world trade was paralysed and this industrialisation was helped by a wave of migration from agricultural areas to the cities. This demographic process has since been repeated in Asian countries.

By the end of the 1960s, that wave of growth was exhausting itself, Meirelles said, and Brazil embarked on a model of government-led growth. At the same time, high liquidity in the international financial markets – fuelled by petrodollars from the oil producing states – led the government to increase public debt to boost growth.

In the short term, this worked out quite well with annual growth rates soaring from 7% to 10%. However, when the U.S. monetary policy stance changed in the 80’s, Brazil reacted by trying to replace foreign borrowings with internal sources but there was not enough domestic cash available. This led to the longest period of hyperinflation seen in recent history. After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 17

To address this, during the 90’s Brazil instituted an austerity plan as well as series of industrial reforms, opened up the economy and introduced a free flow of foreign exchange.

In 2002 a new foreign exchange crisis put inflation controls in check and required further adjustments: “In 2003, a severe monetary and fiscal austerity plan was implemented. Inflation came down quickly and we were able to build up our foreign reserves. The austerity programme cut domestic consumption by 6% in six months which enabled a switch to exports that allowed us to cut the current account deficit, accumulate reserves and pay off all our restructured debts. Brazil became a net foreign exchange creditor,” Meirelles said. The country’s reserves are now more than $250bn, compared with total external sovereign debt of $80bn and it has met its inflation target for the last seven years.

This performance led to a reduction in its risk premium and a fall in real interest rates that fed an increase in investment which enabled the country to move on to a sustainable growth path. “As a result of the banking crisis of the 1990s, we learnt our lesson and most of the measures proposed by the Basel Committee are already in place, for example.” he added.

“The average citizen is enjoying the benefits of our growth,” the Governor said. Average income has grown by 33% in the last seven years and 31m people have moved into the middle class, with a further 36m due to join them in the next six years. Because so many people have moved out of poverty and become part of the economy, tax income is up, which in turn allows the government to pay for improvements in the welfare system, thus further boosting political support.

Finally, addressing the challenges faced by the G-20, the renewed vigour of emerging economies must be recognised by reforming to the Bretton Woods institutions to create a more realistic balance of power, he added. “The advanced nations have a much larger voting share than their economic size would suggest. Rebalancing this would give these institutions much more legitimacy and improve their ability to play the role expected of them in the global economy.”

Policy Summit participants have the time for discussions during the coffee break After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 19

SESSION II Seizing the potential: What strategy for EU- Latin American energy relations?

Though Latin America is one continent, very different realities apply in each country, said José María Calvo-Sotelo, Senior Vice-President of Regulation and Strategy for Endesa Latin America, the largest private energy company in the region, which has a strong presence in Chile, Peru, Colombia, Argentina and Brazil as well as managing SIEPAC, a key interconnection line in Central America “that will hopefully create a single market for electricity there.”

With Latin American countries winning a reputation for applying sound economic principles over the last few years, the economic and political environment in the region is very promising, he said. “In many cases, the regulatory framework is more advanced than in western Europe.”

“Latin America is doing a good job of developing renewables without huge subsidies, and in many cases, the regulatory framework in Latin America is more advanced than in western Europe.”

José María Calvo-Sotelo, Senior Vice-President of Regulation and Strategy for Endesa Latin America

Yet in other areas, there is still a need to address the regulatory and legal framework, along with incentive systems and quality standards, said Sabine Müller, Director of the Regional Division Central America, Caribbean, Mexico and Eastern Latin America of the Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ). 20 After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010

“Energy security is the first thing that Latin American partners mention. It is important for economic growth and demand is increasing because of population growth.”

Sabine Müller, Director of the Regional Division Central America, Caribbean, Mexico and Eastern Latin America of the Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ)

The region needs security of supply and affordable electricity, for which it needs to attract foreign investment, Calvo-Sotelo asserted. In turn, this requires stable regulatory frameworks, with independent market regulators and long- term signals for the energy markets. “Economic growth can only happen with consistent energy supplies but the time frame for energy is long-term so you need stability and predictability,” he added.

Energy security is the first thing that Latin American partners mention, said Müller. “It is important for economic growth and demand is increasing because of population growth.” As a result, many countries still rely on fossil fuel imports.

While Europe has positioned itself as the leader in promoting a low-carbon energy sector, Latin America is in a unique position – in most countries, hydro, the lowest-carbon form of energy generation, is the main source of energy. In Brazil, for example, 80% of electricity comes from hydro and there is huge potential still untapped. “We think hydro is a source of clean energy that can help with the fight against climate change, although there are many environmental controversies involved,” Calvo-Sotelo stated. Latin America’s situation does After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 21

not tie in with Europe’s paradigm of low-carbon energy, which excludes hydro because most of the available resources in Europe have been tapped.

Despite Latin America’s natural advantages, both Chile and Brazil have experienced energy rationing, which has a disastrous effect on growth, the Endesa chief explained. “Because they need security of supply, Latin American countries cannot go as far as Europe in developing renewables, but even so, there have been significant developments, particularly in Brazil and Chile,” he said. The region has even managed to avoid many of the mistakes with subsidy regimes that have dogged countries such as Spain. “Latin America is doing a good job of developing renewables without huge subsidies.”

There is great potential for solar and wind, which in many cases is complementary to hydro – at times of lower rainfall, there is more wind, said Müller. Non-hydro renewables will also become increasingly important as hydro energy could be adversely affected by climate change. There are also opportunities for renewables in areas with low electrification rates, where such technologies can provide decentralised, local solutions.

Technology transfer So how can Europe help? Technology transfer and research and development need to go hand in hand, she said. The development of advanced technologies in energy efficiency and renewables could be a win-win situation and a good example of shared but differentiated responsibilities of Latin America and the EU. To reflect the different levels of development within Latin America, Europe should help to create triangular arrangements that facilitate South-South co-operation.

Under the Copenhagen Accord’s NAMA (Nationally Appropriate Mitigation Actions), each country should define how it will cut emissions by 2020, but a lot of money is needed to finance these efforts. This should come from the EU, the U.S. and Japan, Calvo-Sotelo said. A global market for Clean Development Mechanism (CDM) projects would also help to modernise the region’s energy sector, he added.

Latin America is much richer in renewable resources than Europe and there are many potential projects where the money promised at Copenhagen could be 22 After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010

put to good use, said Markku Nurmi, Director General and Chairman of the Steering Committee of the Energy and Environment Partnership with Central and Latin America at the Ministry of Environment, Finland, which is involved in 240 renewable energy projects covering all technologies. Given the difficulty of getting a global agreement on climate change, “this kind of practical work is a very effective way to spend the money that was promised at Copenhagen.”

“Latin America’s huge potential as a supplier of biofuels is being undermined by EU criteria on sustainability that are too tight.”

Markku Nurmi, Director General and Chairman of the Steering Committee of the Energy and Environment Partnership with Central and Latin America at the Ministry of Environment, Finland

Central America is much better at using renewable energy than the Europeans, he asserted, with 93% of Costa Rica’s electricity coming from non-fossil fuel sources, for example, with El Salvador’s figure of 65% being about the average for the whole region. Even the worst performer, the Dominican Republic, with just 18% of its power from renewable sources, would be near the top of the table in Europe. Despite this, there is lots of potential for technology transfer, even in simple technologies such as solar hot water, which is far less prevalent in Central America than in Europe despite the former’s excellent solar resource.

“We should not forget energy efficiency,” Müller pointed out. “There is a huge potential to reduce energy consumption in industry, construction, and transport sectors as well as at household level.” An intervention from the audience pointed out that there is a tendency for people to focus on supply, but that the cheapest energy is energy saved. “We have a lot to learn from Brazil, which, with the right policies and incentives, managed to reduce energy consumption by 20% within 8 months.” However, Calvo-Sotelo pointed out that this was essentially as a result of rationing so it was not good news.

There is nothing worse for energy efficiency than subsidised pricing, he added. “If energy is very cheap, people will waste it.” After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 23

Policy changes Policies developed in Europe, such as feed-in tariffs, could help project developers to get schemes off the ground and the CDM’s role in emissions trading could be central if it was simplified. The first CDM project anywhere was in Honduras, Nurmi said, but it took two years to get validation, meaning that the developers had a long wait to see any returns on their investment. Developers are also in the odd situation of trying to show that their projects are not the most economically or financially attractive in order to get CDM funding. “If it is a good project, it is not ‘additional’ under UN rules. We need to skip additionality for a few years, at least for smaller projects.”

Latin America’s huge potential as a supplier of biofuels that could help Europe meet its transport fuel obligations is being undermined by EU criteria on sustainability that are so tight that they rule out many sources of supply, he added.

A few hundred participants attended the Summit on Latin America

26 After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010

This is problematic, said Henrik Henriksson, Senior Vice-President of Trucks, Franchise and Factory Sales at Scania, because 10% of fuel in the EU must be from renewable sources by 2020, up from about 5% today. However, there is a solution that is available right now – certified ethanol. The city of Stockholm, for example, runs a fleet of 450 buses on ethanol, 90% of which is certified and imported from Brazil. “This has led to an annual 45,000 tons reduction of CO2 emissions since 1989 and it was done with exemption from the ethanol import and CO2 taxes but without subsidies. It still made commercial sense. Now it is time for the rest of Europe to wake up and see the possibilities.”

Certification has to take into account social issues as well as environmental issues both local and global, he added. However, he pointed out, more land is devoted to golf courses than producing biofuels so it is important to keep things in perspective. It is important to look at how land is used, said Nurmi, highlighting the benefits of Jatropha, a plant which can be grown on arid non-agricultural land and is indigenous to Central America.

However, there are both formal and informal trade barriers. For example, while biodiesel is taxed at e15 and bioethanol e25 per Gigajoule, the tax on diesel is just e8 per Gigajoule, Henriksson pointed out. “Does that send the right signal? I don’t think so. Instead of talking about future solutions, let’s start using the solutions that are available now.”

“Instead of talking about future solutions, let’s start using the solutions that are available now.”

Henrik Henriksson, Senior Vice-President of Trucks, Franchise and Factory Sales at Scania

Europe has much to learn from Latin America when it comes to alternative fuels, Henriksson suggested, while Europe has much to teach its transatlantic neighbours on transport efficiency. European initiatives including longer trucks and driver training would be easily applicable to Latin America, but information After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 27

Participants exchange with speakers such as the United Nation’s Osvaldo Rosales (left) could flow the other way about initiatives such as Bus Rapid Transit schemes with dedicated bus lanes that run very successfully in places such as Santiago, Bogota and Curitiba.

Henriksson also added that the weight of the longer truck is the same as a standard European one, but allows for more volume to be transported in one trip, reducing the amount of pollution and of human resources employed. Both in Europe and in Latin America it is not weight that is the limiting factor in transport with trucks. Instead, in 70% of all truck loads it is volume that is the limitation. This would imply that we should try to encourage longer vehicles of up to 25,25m instead of 16,35m like in most European members states. Longer vehicles would not damage the road more or require rebuilding bridges, since the maximum weight would remain unchanged.

Allowing longer vehicles on certain corridors could lower emissions significantly. In combination with driver training and transport management systems we would estimate up to 20% reduction of CO2, said Henriksson.

Yet investors in the region face resource nationalism in some countries that affects the investment climate, said Will Pearson, Analyst of Global Energy and Natural Resources at Eurasia Group. Nonetheless, there are some interesting collaborations going on, such as SIEPAC, Endesa’s interconnector 28 After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010

project that links six countries in Central America and Panama. “This is a great example of how European companies can collaborate with governments in future. But while completing the physical infrastructure is a big accomplishment, it needs to be accompanied by regulatory co-ordination to become a real game changer. This is an area where the EU can actively engage with Central America.”

“The situation in Spain illustrates the dangers inherent in a sector that is currently entirely dependent on government subsidies, where any twitch in policy casts doubt on your investment.”

Will Pearson, Analyst of Global Energy and Natural Resources at Eurasia Group

Lessons to be learnt The EU is itself still moving towards market co-ordination and many of the issues being addressed on this side of the Atlantic – such as how to get different countries to work together – could be illustrative for Central American countries, which are individually quite small but together make an attractive market. While there is significant potential for renewable energy in the region, there needs to be significant investment in grid infrastructure for it to be properly exploited, he added. Smart grid technology, where EU and U.S. companies have taken a lead, will facilitate the penetration of intermittent renewables such as wind and solar, Pearson added.

The current situation over incentives for solar installations in Spain illustrates the dangers inherent in a sector that is currently entirely dependent on government subsidies, “where any twitch in policy casts doubt on your investment,” he pointed out.

While renewables might not provide the complete answer, Finland’s experience with nuclear is a cautionary tale about the advisability of turning to that technology instead, said Nurmi. The country agreed to build the first reactor for 20 years, but it has been much more costly than expected and subject to numerous delays. After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 29

Latin America’s renewables potential is such that it is probably cheaper in the long run to focus on those technologies rather than nuclear, he added. Nuclear power plants take at least 10 years to develop, Calvo-Sotelo argued, and Latin America’s strong potential in both hydro and gas suggests that further nuclear development will not be necessary. However, resource nationalism is a problem, with Chile in particular frustrated given its position as a country surrounded by gas-producing countries but stymied by resource nationalism. Nonetheless, “betting on nuclear in South America is a long shot,” he added.

Political integration is important to foster an efficient, reliable and intelligent energy sector. A number of countries such as Brazil and Chile are building LNG terminals to import gas because of fears over supplies from Bolivia and Venezuela, while Argentinian and Venezuelan supplies are also falling. In the long term, Latin America should be a gas exporter, which could help Europe, given that its main alternative sources of supply are Russia and Iran.

After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 31

SESSION III Strengthening the ties: What should be the EU’s Latin American priorities?

Europe, with the exception of Spain, has very little interest in Latin America, said Augusto de la Torre, Regional Chief Economist for Latin America and the Caribbean at the World Bank, at the start of the final session. “It is observable in repeated and diverse forms,” he added.

There is more political support for focusing on poverty in Africa than across the Atlantic and there is a perception that the “middle-income” countries of the region have escaped the worst of poverty and under-development. However, the time has come for Europe to re-engage with Latin America, whose middle- income countries are at a specific stage of their development that is tricky and complicated to manage, de la Torre stated. “There is much to be learnt in the development process from the different stages of development and the experience of Latin America can be helpful to Africa.”

“Mainstream Latin America has found a way to come through its macroeconomic instability and turn it around. That is the Latin America Europe needs to engage with.”

Augusto de la Torre, Regional Chief Economist for Latin America and the Caribbean at the World Bank

Indeed, Latin America has much to learn from the growth spurts experienced by countries such as Spain, which 30 years ago had levels of income similar to Latin America. “There is a middle income growth trap – few middle-income countries emerge to prosperity.” 32 After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010

Yet Latin America has much to teach Europe about dealing with financial crises, too. “Turbulence in financial markets and tensions over sovereign debt are very familiar to us. We have lived with them for many years,” he pointed out.

“It is clear that the growth engine of the global economy is going to change. Latin America should no longer be seen as a difficult region in which to invest. This is a race against time and the EU has to seize the initiative.”

Osvaldo Rosales, Director of the Division of International Trade of the United Nations Economic Commission for Latin America and the Caribbean

The current resilience of the region in the face of the financial crisis is a tremendous window of opportunity for better co-operation between Latin America and the EU, said Osvaldo Rosales, Director of the Division of International Trade of the United Nations Economic Commission for Latin America and the Caribbean. “The recent summits were important but they are not enough,” he said. The trade effects of the agreements signed during Spain’s EU Presidency will be limited, he said, speaking from his experience of negotiating deals on behalf of Chile with the EU, and the U.S. “The agreements should have focused more on innovation and competitiveness. These are the Achilles heel of Latin America.”

Losing ground “Europe is losing ground as a commercial and trading partner of Latin America,” he added. Twenty five years ago, the EU was the destination for 30% of exports from Latin America – now the figure is 14%, less than the Asia-Pacific region. By 2014, China will have overtaken Europe as the second biggest trading partner for the region.”

Yet Europe’s ability to show that it is possible to have a unified market of 27 countries is a crucial advantage for the region against the U.S. and China when dealing with the many countries of Latin America, and it is one that it needs to grasp as soon as possible. The EU should support value chains in Latin America After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 33

and help regional companies become more global. “This requires a new way of seeing co-operation that focuses on trading opportunities and on stimulating globalization along with better links between companies,” Rosales asserted.

The concept of aid for trade should also be revisited. Aid for trade is now aimed at low-income countries, but it should be extended to middle-income countries such as those in Latin America. The GDP per head of the top five economies in the region are comparable to that of the bottom five in the EU, it was pointed out.

“It is clear that the growth engine of the global economy is going to change. Latin America should no longer be seen as a difficult region in which to invest rather than an opportunity,” argued Rosales. “This is a race against time and the EU has to seize the initiative.”

Global architecture The key to both European re-engagement and greater South-South co-operation between Latin America and other developing regions such as Africa is better use of the global multilateral architecture, de la Torre said. “We need to draw on the deep connections between the two regions. Europe established colonies in Latin America and created most of the public institutions and civil codes.” The two regions also have similar philosophies on issues such as the redistributive role of the state, in contrast to attitudes in Asia or North America. Rámon Jáuregui Atondo, Chairman of the European Parliament Delegation to the EU-Mexico Joint Parliamentary Committee, insisted on that point, saying “we share a common set of values, interests, and cultural ties that we do not share with other emerging regions of the world.”

“From a strategic point of view, this is a fundamental political arena because there are two other global stakeholders present in the region and exerting their influence at a global level – the U.S. and China.”

Rámon Jáuregui Atondo, Chairman of the European Parliament Delegation to the EU-Mexico Joint Parliamentary Committee 34 After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010

There are many common institutions and cultural linkages and because of globalisation, these links have been rekindled and are only going to grow in importance as Latin America becomes better connected to Asian economies. Latin America needs to take advantage of Asia’s demand for raw materials and create sustainable growth from meeting that demand.

Business understands this, but sometimes policymakers do not, even though one third of Latin American trade is with Europe. Meanwhile, the region is establishing new connections with other regions, especially Asia, which are a source of dynamic growth that European businesses are starting to notice. “For some reason, Europe is a bit out of the picture, yet Latin America has a greater affinity to European economic systems than to the U.S. or Asia.”

This affinity could provide a solution to both regions’ demographic problems, said Jáuregui. Europe will need 100m migrants in the next few years to prevent the ratio between active and passive members of society falling, he pointed out. “I wonder if Europe will be able to regulate migration but if so, how can we avoid looking at Latin America? They need emigration too, and they have a population with linguistic, political and religious values that chime with Europe.”

Already, 5m people have come to Europe from Latin America, “so we can see how easy it is to integrate Latin American immigrants. I think Europe should reflect on that.”

De la Torre added that “Latin America, after many years of economic instability, is starting to consolidate the quality of its economic policies and is coming out of the crisis looking like a better asset class, with better prospects. It would be a pity for Europe to miss out on this.”

Since 1993 the European Investment Bank (EIB) has made 67 loans in 12 Latin American countries totalling more than e4bn, pointed out Francisco de Paula Coelho, Director of the Asia and Latin America Department at the EIB. The Bank’s original main remit has been to support projects of mutual interest, which has led it to finance projects undertaken by the subsidiaries of EU companies, joint venture operations between local and EU companies or projects entailing a high level of transfer of EU technology and know-how. However, since 2007, the After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 35

European Council has enlarged this remit to encompass projects that contribute to climate change mitigation even if there is no EU involvement.

“What the market and Credit Default Swaps prices tell me is that the cost to cover risk in many Latin American countries is still prohibitive, even though I would be very comfortable investing my own money in most Latin American countries.”

Francisco de Paula Coelho, Director of the Asia and Latin America Department at the EIB

Barriers to growth Many of the summit participants underlined that the EU share of trade and foreign direct investment in Latin America was below potential given the regions’ shared economic and political values, Coelho said. “I would say this is true for every country in Latin America.” So what are the bottlenecks leading to this under-representation, he asked. They include insufficiently developed capital markets, the inadequacy of debt instruments and the prohibitive cost of protecting against political risks.

“There is also a lack of viable local currency instruments,” he added. “Many European investors borrow in U.S. dollars or they borrow locally but in very short maturities – shorter than the economic life of the project. We all know unfortunate stories of sound projects where the profits were wiped out by refinancing costs or currency mismatches, especially in non-export sectors such as infrastructure and high value social projects, where there is no natural currency hedge.”

Yet this is a paradox in a region that still has a relatively high savings ratio. However, because of the inadequacy of local capital markets, savings exceed the availability of suitable investment instruments, he continued. Local savers are short of savings opportunities, so there is a role for the international financial institutions (IFIs) and multilateral development banks (MDBs) to recycle some of these savings into domestic gross capital formation. 36 After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010

IFIs and MDBs have started issuing local currency denominated bonds, he stated, but there is scope for them playing a greater role in developing local currency capital markets if governments abolish restrictions on issuance by IFIs and MDBs. “I can see a useful role for these institutions in recycling part of the excessive savings of these countries into productive areas of their economies,” he said.

While the perceived political risks of doing business in the region have fallen – including regulatory risks and protection against breach of contract – this is not reflected in the current levels of Credit Default Swaps, Coelho asserted. “What the market tells is that the cost to cover risk in many Latin American countries is still prohibitive, even though I would be very comfortable investing my own money in most Latin American countries. The cost to cover political risk in many countries in the region is still prohibitive,” he added. The EU should help by extending political risk cover to allow EU investors to play on a level playing field with their non-EU investors who often benefit from political guarantee schemes.

The Spanish EU Presidency has pushed forward Latin America-EU relations in the political and economic spheres, said Jáuregui. The association agreement with the Central American countries is the first free trade agreement that will enhance regional integration in a part of the world that is usually focused on the U.S., he pointed out. The Spanish EU Presidency has created a framework and political context for Latin America-EU relations. “From a strategic point of view, this is a fundamental political arena because there are two other global stakeholders present in the region and exerting their influence at a global level – the U.S. and China. At the same time, three Latin American countries – Brazil, Argentina and Mexico – are now a crucial part of the new global governance. Therefore, the reopening of trade negotiations with Mercosur, which represents a market of more than 700m people, was a key success of the Spanish EU Presidency,” concluded Jáuregui.

Ideological divide The region is increasingly important to European business and with projected growth of 3% this year, it has economic momentum as well as huge growth potential. However, it is impossible to ignore the ideological divide in the region. The EU’s agreement with Peru and Colombia were concluded outside After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 37

the framework of the Andean Community because Bolivia accused the EU of colonialism, the MEP said, while the European Parliament is increasingly sensitive to human rights policies in Latin America, particularly in Colombia. This concern takes on a new importance because of the European Parliament’s new powers to veto agreements struck by the European Commission.

Yet moderator Charles Powell, Deputy Director of Research and Analysis at Real Instituto Elcano, wondered if there was not an element of hypocrisy in the European Parliament’s attitude to Colombia, a country with an 8% growth rate and an electoral process that has proved very vigorous. “I do not think Russia, for example, is more democratic than Colombia.”

“Let’s get real about our own single market before complaining about the shortcomings of others.”

Charles Powell, Deputy Director of Research and Analysis at Real Instituto Elcano

Marcela Szymanski, Director, Kreab Gavin Anderson, pointed out that Mexico’s deal with the EU would not have happened if concerns over treatment of trade unionists and journalists were taken into account. “However, someone took a look at what Mexican civil society was capable of asking from its government. A deal took place and the obligations of transparency that were pushed from the grass-root level gave Mexicans the liberty to say that those trade unionists and journalists do not get killed by the authorities. The EU should have faith in what the citizens of Latin American countries can demand from their own governments - you will see what a wonderful difference it will make.”

So what can Europe do to strengthen ties, Powell asked. Firstly, it should try to close the expectation gap by taking seriously all this talk of strategic partnership. “We do not always do that.” Secondly, we need to acknowledge our own problems. “Let’s get real about our own single market before complaining about the shortcomings of others.” 38 After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010

The EU also needs to be able to deal with countries that are challenging Europe’s long-standing philosophy of integration and the flexibility it showed in signing an agreement with Colombia and Peru is important. “Should we have refrained from signing that agreement so as not to endanger the Andean Community? The Andean Community has survived and Ecuador and Bolivia are interested in closer co-operation,” he pointed out.

Finally, “we need to give more thought to the things that we can do together, such as climate change, energy security, global economic governance, the fight against drugs and international organised crime.” Baroness Ashton, the EU’s foreign policy chief, needs to find Latin America on the map in her office, he added. “The current indifference simply will not do.”

However, one intervention from the audience suggested that the real issue is that Latin America is not sufficiently interested in the EU. “Isn’t part of the problem After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 39

that they are doing what we want them to – i.e. diversifying their trade. I am very appreciative of Latin America’s new autonomy and ability to take its own decisions.”

Rosales said that it is important for Latin America to have a strong relationship with China, “the driving force of the 21st century.” However, he highlighted the danger of remaining too reliant on primary industries.

Otherwise engaged De la Torre agreed that the inattention goes both ways but said that until recently, Latin America was very much occupied by its internal instability problems as it underwent a painful and difficult transition from military dictatorship to democracy. “This instability was exacerbated by a great deal of inequality, which meant that the financial crises had more devastating regressive effects on income distribution.” However, the last 15 years have seen significant institution-building, especially in terms of managing economic stability and progress in social policy to tackle poverty and inequality. “Going forward, Latin America will have fewer home-grown problems of economic and financial instability and social inequality and will be in a better position to be more open to engagement,” he added.

This is not always the message that is received because there is a lot of attention on “outlier countries” that are less willing to engage such as Venezuela and Bolivia, rather than on institution-building in countries such as Chile, Peru and Brazil. The attitude of these countries is “an extreme expression of the unresolved problem of inequality and a dominant equity agenda. But it is unsustainable and will lead to economic instability down the line,” de la Torre said.

That is why the problems of those countries are not likely to be sustainable. “I don’t see other countries in Latin America looking to emulate the Chavez model. Mainstream Latin America has found a way to come through its macroeconomic instability and turn it around – that’s why we did well in this crisis. These are also countries where the same macroeconomic prudence has created the conditions for sustainable social policy. That is mainstream Latin America and that is the Latin America Europe needs to engage with.” 40 After the Sspanish EU presidency:: Towards a new latin america-EU partnership? Summer 2010

Annex I - Programme

09.15 – 09.30 AFTER THE SPANISH EU PRESIDENCY: What next for Latin America-EU relations? Juan Pablo De Laiglesia y González de Peredo, Spanish State Secretary for Latin America

SESSION I TAKING THE LEAD: Where next for innovation, trade, 09.30 – 11.00 and investment?

The EU is the largest investor in Latin America and its second biggest trading partner, with trade between the two more than doubling since 1990. But is the Latin American marketplace still a jealously guarded preserve of Spanish and Portuguese businesses, or has Spain’s Presidency of the EU fostered wider interest? What extra efforts are needed to boost investment in the aftermath of the global financial crisis, and can innovation policies help foster economic and social development? What will be the role of innovation clusters, what indicators and benchmarks can assess their effectiveness, and what is the role of Latin American multinational companies? As to the creation of a single marketplace for Latin America, what are the benefits of getting the Mercosur project back on track, and how has Madrid’s stint in the chair helped encourage and strengthen political and economic dialogue?

Karel De Gucht EU Commissioner for Trade Carlos López Blanco Director of the International Office of Telefónica and former Spanish State Secretary for Telecommunications and Information Society Lourdes Casanova Lecturer for Corporate Management at INSEAD Henrique de Campos Governor of the Central Bank of Brazil Meirelles Sandra Fuentes-Berain Ambassador and Head of the Mission of Mexico to the EU

Moderated by Giles Merritt, Secretary General of Friends of Europe After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 41

11.00 – 11.30 Coffee break

SESSION II SEIZING THE POTENTIAL: What strategy for EU- 11.30 – 13.00 Latin American energy relations?

Latin America is home to two of the 12 OPEC members (Ecuador and Venezuela), and a regular EU-OPEC ministerial dialogue has been established to address oil market developments. At the same time, there is growing awareness of the need to develop clean energy policies to combat climate change. Many Latin American countries already derive much of their energy from hydroelectric power, while Brazil has huge potential for the production of affordable biofuels. With clean energy policies a key theme in discussions between the EU and Latin America, has the Spanish Presidency encouraged greater European involvement in Latin America’s energy markets? What new elements in EU policymaking in the energy sector might Central and South American governments like to see and how can Spain capitalise on its leadership in renewable energies to promote sustainable energy solutions?

José María Calvo-Sotelo Senior Vice President of Regulation and Strategy for Endesa Latin America Henrik Henriksson Senior Vice President of Trucks, Franchise and Factory Sales at Scania Sabine Müller Director of the Regional Division Central America, Caribbean, Mexico and Eastern Latin America of the Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) Markku Nurmi Director General and Chairman of the Steering Committee of the Energy and Environment Partnership with Central and Latin America at the Ministry of Environment, Finland Will Pearson Analyst of Global Energy and Natural Resources at Eurasia Group

Moderated by Giles Merritt, Secretary General of Friends of Europe 42 After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010

13.00 – 14.00 Networking lunch

SESSION III STRENGTHENING THE TIES: What should be the EU’s 14.00 – 15.30 Latin America priorities?

Latin America has long been disregarded by many Europeans, and of all the world’s major regions it certainly receives the least EU attention. The conclusions of the most recent EU-Latin America summit reaffirmed the need for closer cooperation, but what concrete steps are needed to strengthen political dialogue? With a number of high-profile socialist governments at the helm in the region, what prospects are there for closer Latin America-EU cooperation? At a time of euro zone crisis and slow economic growth in Europe, the Latin American financial system, with a banking sector boosting rather than hindering economic activity, can be described as a showcase for the world. With a solid forecast of 4% GDP growth in Latin America for 2010, what lessons can Europe learn from emerging global players, and can Latin America help Europe on its way to recovery?

Augusto de la Torre Regional Chief Economist for Latin America and the Caribbean at the World Bank Francisco de Paula Coelho Director of the Asia and Latin America Department at the European Investment Bank (EIB) Ramón Jáuregui Atondo MEP Chairman of the European Parliament Delegation to the EU-Mexico Joint Parliamentary Committee Osvaldo Rosales Director of the Division of International Trade at the United Nations Economic Commission for Latin America and the Caribbean

Moderated by Charles Powell, Deputy Director of Research and Analysis at Real Instituto Elcano

15.30 End of Summit After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 43

ANNEX II - List of Participants

Tomas Abadia Vicente, Principal Administrator, USA & Francisco Bataller Martin, Deputy Head of Unit, Canada, European Commission: Directorate General for Coordination and Analysis, European Commission: External Relations Directorate General for External Relations Francisco Acosta Soto, Deputy Head of Unit responsible Bernadette Bergsma De Paz, European Affairs for the Andean Community, European Commission: Consultant, Gabinete De Recolocación Directorate General for External Relations Industrial, Spain Philippe Adriaenssens, President, Young European Carmen Bernal, First Secretary, Commercial Affairs, Federalists (JEF) Mission of Mexico to the EU Ana Aguado Cornago, Head of Office, European University Jörg Biermann, Counsellor for Latin America, Institute Economic Department, Permanent Representation of Edna Alcantara, Attaché, Mission of Mozambique to the EU Germany to the EU Juan Angulo, Deputy Head of Mission, Mission of Chile to the EU Paolo Bochicchio, Public Affairs Director, European Carlos Appelgren, Ambassador, Mission of Chile to the EU Plastics Converters (EUPC) Katerina Argyropoulou, Assistant, International Affairs, Alba Bosch, Assistant to Ricardo Cortés Lastra MEP, Association of European Chambers of Commerce & European Parliament Industry (EUROCHAMBRES) Anne-Charlotte Bournoville, Administrator, International Javier Arias, Head Representative to the EU, Banco Relations, European Commission: Directorate General for Bilbao Vizcaya Argentaria (BBVA) Competition Miriam Ascenso, EU Relations Director, European Andrew Bower, Assistant, European Commission: Confederation of Junior Enterprises (JADE) Directorate General for External Relations Christoph Auffermann, Assistant, Friedrich-Naumann- Pierre-Jean Brasier, Policy Officer, European Association Stiftung EU Office of Elected Representatives from Mountain Regions Boris Azais, Director of Government Affairs, Lorenzo Brescia, IFIF Coordinator & Policies Outside EU, Merck Sharp & Dohme (MSD), France European Investment Bank (EIB) Jose Baiges Planas, Policy Officer, European Commission: Karl Buck, Independent Analyst Directorate General for External Relations José María Calvo-Sotelo, Senior Vice President of Paolo Baldan, Director Al Invest Team, Al Invest IV Regulation and Strategy for Endesa Latin America, Marek Banaszkiewicz, Director, Space Research Centre Endesa, Spain Polish Academy of Sciences Poland Geert Cami, Co-Founder & Director, Friends of Europe Martin Banks, Journalist, The Parliament Magazine, Les Amis de l’Europe DODS EU International Press Centre Enrique Campoverde, Third Secretary, Mission of Nicole Baromska-Glab, Assistant, European Commission: Venezuela to the EU Legal Service Angel Campuzano, EU Affairs Adviser, Regional Office of Carlos Barrios Cachazo, Assistant, European ommission: the Government of Cantabria in Brussels Directorate General for Education and Culture Gabriela Caraman, External Consultant, LOGOS Public Affairs 44 After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010

Victor Carballo Collado, Assistant, Indra Juan Pablo de Laiglesia y González de Peredo, State Julio Cardoso, Policy Officer for International Aspects Secretary for Latin America, Ministry of Foreign Affairs of Sustainable Industrial Policy, European Commission: and Cooperation, Spain Directorate General for Enterprise and Industry Francisco de Paula Coelho, Director, Asia and Latin Sean Carroll, Desk Officer, Russia (Political Issues), America, European Investment Bank (EIB), Luxembourg European Commission: Directorate General for External Alma De Walsche, Journalist, MO* Relations Wilfried De Wever, President, Effectius Lourdes Casanova, Lecturer, INSEAD, France Pier De Wilde, Senior Analyst, Aegis, United Kingdom Ramon Casiloa, Assistant to the Director for Latin Johannes Deichmann, Assistant, Federation of German America, BT Spain Industries (BDI) Representation to the EU Carlos Castejón de Castro, EU Affairs, Engineering Joan Delaney, Independent Consultant Institute of Spain Polydoros Demetriades, Principal Administrator, Hugo Clysters, Deputy Director, European Governmental European Commission: Directorate General for Affairs, Ford Motor Company Education and Culture Ludovic Cocogne, Country Manager, Colombia, Agence Derya Demircay, Assistant, Turkish Industry and Business Française de Développement (AFD), France Association (TUSIAD) Ion Constantin, Second Secretary, Permanent Wilfried Derflinger, Judge, BMJ, United Kingdom Representation of Romania to the EU Verena Detzel, EU Business Development Advisor, Javier Corrales Ciganda, Director, Union de Pequenos PricewaterhouseCoopers Agricultores y Ganaderos Kálmán Dezséri, Policy Officer, Audiovisual and Media Pierre-Valentin Costa, Liaison Officer, EU Correspondent, Policies, European Commission: Directorate General for Inter Euro Media Information Society & Media Carmen Csernelházi, Latin America Delegate, Permanent Marco Di Benedetto, EU Policy Advisor, Policy Action Representation of Hungary to the EU Ricardo Diez-Hochleitner Cousteau, Policy Officer, Luis Cuervo Spottorno, Policy Officer Maritime Policy in the Horizontal Matters - Latin America, European Atlantic, Arctic, outermost regions, European Commission: Commission: Directorate General for External Relations Directorate General for Fisheries & Maritime Affairs Özlem Dönmez, Junior Consultant, Corporate and Public Katja Damman, Vice-President External Communications, Strategy Advisory Group (CPS) GDF Suez/Environment Tony Dufays, Director Regional Offices and Services, Frederick De Backer, Manager, EU Regulatory Affairs, International Association of Public Transport (EPF) Telefónica EU Liaison Office Francesca D’Ulisse, Member of the International Department, Henrique de Campos Meirelles, Governor, Central Bank Latin America and Caribbean, Democratic Party, Italy of Brazil Soumitra Dutta, Dean of External Realtions-Professor of Julia De Clerck-Sachsse, Scientific Research Programme Information Systems, INSEAD, France Officer, European Commission: Directorate General for Research Roberto Echandi Gurdian, Ambassador, Mission of Costa Karel De Gucht, Commissioner for Trade, European Rica to the EU Commission Janis Engel, Assistant, TÜV Rheinland Augusto de la Torre, Chief Economist, Latin America and Maud Farcouli, Responsible for European financing in Caribbean Region, The World Bank Headquarters, United research & innovation, Espace Interrégional Européen, States of America Bretagne / Pays de la Loire / Poitou-Charentes After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 45

Rui Faria Da Cunha, Head of Brussels Office, Brazilian Luiz Goncalves, International Relations Coordinator, Trade and Investment Promotion Agency (APEX), Brazil Brasil Junior Natalia Federighi, Director Public Affairs, Yara International Ines Gonzales del Mazo, Project Analyst, European Alex Figueiredo, Operations Manager, Brazilian Trade and Programmes Department, Embassy of Spain to Belgium Investment Promotion Agency (APEX), Brazil Silvia González Chanson, Project Manager, European Katrina Finch, Senior Consultant, Belarus EU Business Commission: EuropeAid Cooperation Office (AIDCO) Council Aida Gonzalez Palomino, Research Analyst, International Nils Fonstad, Senior Research Fellow, INSEAD, France Fuel Quality Center (IFQC) Jose Luis Fontalba, Communication and Marketing Patricia Gores, Communication Officer, ACP Business Climate Manager, Centre for European Studies Elvira Grassi, Programme Assistant, Promotion of David Frautschy Heredia, Manager, Latin America Affairs, Agricultural Products, European Commission: Directorate Telefónica EU Liaison Office General for Agriculture and Rural Development Jennifer Freedman, Journalist, Bloomberg News Marek Grela, Director, Transatlantic Relations, United Tomas Friedmann, Brussels Correspondent, Radio Carve, Nations, Human Rights and Counter-Terrorism, Council Uruguay of the European Union: Crisis Management and Planning Sandra Fuentes-Berain, Ambassador, Mission of Mexico Directorate (CMPD) to the EU Olivier Grosjean, EU Liaison and Project Development Nathalie Furrer, Director, Friends of Europe Les Amis de Coordination for Latin America, International l’Europe Organization for Migration (IOM) Regional Liaison Camille Gadrat, Chargée de Missions, Bureau Européen & Coordination Office to the EU de l’Agriculture Française Enrique Guerrero Salom, Member, European Parliament: Naone Garcia, European Affairs Coordinator, Brasil Junior Committee on Development Laura Garcia Chiquero, Assistant, Indra Tamira Gunzburg, Policy Advisor Central Africa, José Carlos García de Quevedo, Coordinator Counsellor, Broederlijk Delen Trade, Permanent Representation of Spain to the EU William Hanna, Head of Unit, Centralised Operations, Antonio García del Riego, Head of Corporate Affairs in the Asia (Unit D2), European Commission: EuropeAid EU, Banco Santander Group Benelux Cooperation Office (AIDCO) Carolina García Rizo, Policy Officer, Delegation of the Henrik Henriksson, Senior Vice President of Trucks, Junta of Andalucia in Brussels Franchise and Factory Sales, Scania AB, Sweden Claudia Garman, Programme Manager, Deutsche Elia Hernández, Counsellor, Mission of Venezuela to the EU Gesellschaft für Technische Zusammenarbeit (GTZ) Bert Hofmann, Principal Administrator, WTO & Brussels Commercial Policy, Council of the European Union: Crisis Christian Ghymers, Adviser, Information and Management and Planning Directorate (CMPD) Communication, European Commission: Directorate Ralf Hospodarsky, Latin America Delegate, Permanent General for Economic and Financial Affairs Representation of Austria to the EU Iván Glasovac, Officer, Centre for European Studies Naoni Howard, Coordinator Corporate Affairs, Louis Rose Goldman, Analyst, Latin America, Aegis, United Kingdom Vuitton Moet Hennessy group (LVMH) Mendel Goldstein, Head of Delegation, European Matjaz Hribar, Managing Director, Pristop Europe Commission: Delegation to Nicaragua, Costa Rica, Aki Ishiwa, Development cooperation, Regional policy, El Salvador, Guatemala, Honduras and Panama Transport, Brussels Office Regione Emilia-Romagna 46 After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010

Christine Jakob, Officer for Social Affairs, European Pablo Lopez-Alvarez, Senior Associate, FD Blueprint Organisation of Military Associations (EUROMIL) Meera Louis, Journalist, Bloomberg News Ramón Jáuregui Atondo, Chairman of the European Teresa Luis Ruiz, Head of European Public Affairs, Endesa Parliament Delegation to the EU-Mexico Joint Ellen Madeker, Programme Manager, Friedrich-Naumann- Parliamentary Committee Stiftung EU Office Thor Jensen, Assistant, Alstom Eugenia Madisson, Assistant, Mission of Canada to the EU Shane Jones, Latin America Delegate, Permanent Itumeleng Makabanyane, Counsellor, Agriculture, Mission Representation of the United Kingdom to the EU of South Africa to the EU Jerome Joseph, Second Secretary, Embassy of Trinidad Kinga Malinowska, Manager Economic Affairs, and Tobago to Belgium Confederation of Food and Drink Industries of the EU (CIAA) Eric Jourcin, Economist, Latin America Department, Maria Del Carmen Marques Ruiz, International Relations Agence Française de Développement (AFD), France Officer, Desk Officer Bolivia, European Commission: Jaime Kcomt, Managing Director, Kcomt Consulting Directorate General for External Relations Gabriela Keseberg Davalos, Communication Officer, Teresa Martínez González, Deputy Counsellor, Trade, International Crisis Group (ICG) Brussels Office Permanent Representation of Spain to the EU (Headquarters) Esther Martín-Ortega, Director, Inforpress Group, Spain Kristof Krieg, Assistant, European Parliament Izabela Matusz, First Secretary, Ministry of Foreign Affairs, Sanjeev Kumar, Senior Associate, Third Generation Poland Environmentalism (E3G) Francisco Medeiros, Principal Scientific Officer, Networked Tilmann Kupfer, Vice President Trade & International Media Systems, European Commission: Directorate Affairs, BT Group General for Information Society & Media Min-Seok Kwon, Project Assistant, Korean International Cherine Mekkaoui, Coordinator, Mission of Canada to the EU Trade Association (KITA) Giles Merritt, Secretary General, Friends of Europe Les Bruce Lai, Chargé d’Affaires, Embassy of Trinidad and Amis de l’Europe Tobago to Belgium Émilie Mespoulhes, Assistant, Fundacion Comunidad Eduardo Lanza, Advisor, Telefónica, Spain Valenciana-Region Europea Geert Laporte, Head of Institutional Relations and Jozsef Mikita, Project Officer, Stuttgart Region Partnership Development, European Centre for European Office Development Policy Management (ECDPM) Isabel Mohedano Sohm, Head of the European Union Mariana Lara-Gehlhaar, Researcher, Effectius Office, Indra Jouko Leinonen, Counsellor, Transatlantic Relations, Diego Molano, Deputy Director General for Corporate EFTA, ETA, Nordi Cooperation, Textile & Steel, Permanent Affairs - Latin America, Telefónica, Spain Representation of Finland to the EU Eduardo Molina, Manager, Latin America, Environmental Pablo Lluesma, Journalist, MO* Policy Centre (ENHESA) Melanie Loos, Public Relations Officer, Hanse Office Theresa Moloney, Project Officer - Migration and Joint Representation of the Free and Hanseatic City Integration, Eurocities of Hamburg and the State of Santiago Mondragon, Member of the Cabinet of the Schleswig Holstein President, Committee of the Regions Carlos López Blanco, International Affairs Director, Mercedes Monedero Higuero, Counsellor, Trade, Telefónica, Spain Permanent Representation of Spain to the EU After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 47

Victor Hugo Morales Meléndez, Deputy Head of Mission, Will Pearson, Analyst, Global Energy and Natural Mission of Mexico to the EU Resources, Eurasia Group London Offices, United Kingdom Timothy Morgan, Cameraman, Press TV Brussels Office Anabela Pereira, Coordinator for Internal Communication, Sabine Müller, Director of Regional Division for Central European Commission: Directorate General for Translation America, Caribbean, Mexico, Eastern Latin America, Pablo Perez-Illana, Project and Policy Officer, European Deutsche Gesellschaft für Technische Zusammenarbeit Commission: Directorate General for Research (GTZ), Germany Luis Pertusa Rodríguez, Technical Counsellor, Cabinet Marie Nagy, Member, Senate, Belgium Committee on of State Secretary for Latin America, Ministry of Foreign External Relations and Defence Affairs and Cooperation, Spain Preethi Nallu, Journalist, Press TV Brussels Office Katarina Petac, Trade Policy Councellor, Permanent Riccardo Napolitano, Director External Affairs, Representation of Slovenia to the EU Equipment & SME, AeroSpace and Defence Industries Michele Petracca, Head of Support and Liaison Office for Association of Europe (ASD) Community Relations, Regione Molise Office in Belgium Miguel Ángel Narvaez Flores, Adviser, Mission of Mexico Gotelenne Piaton, Chargée de mission “Think to the EU Tanks”, Service de Presse et Information, Permanent Ricardo Neiva Tavares, Ambassador, Mission of Brazil to the EU Representation of France to the EU Werner Neuhauss, Regional Economist, Country Manager Jaroslaw Pietras, Director General, Council of the for Caribbean, Equador, Colombia, KfW Bankengruppe, European Union: Directorate General for Environment, Germany Health, Consumers, Education and Culture Markku Nurmi, Director General, International & EU Maria João Podgorny, Adviser to Professor Vital Moreira, Affairs, Chairman, Steering Committee of Energy & European Parliament Environment Partnership, Latin America, Ministry of the Enrico Portelli, Junior Program Manager, Deutsche Environment, Finland Gesellschaft für Technische Zusammenarbeit (GTZ) Brussels Faroudja Ouriachi, Assistant to the Permanent Charles Powell, Deputy Director, Research, Elcano Royal Representative, Assemblée Nationale - Représentation à Institute, Spain Bruxelles Martens Quentin, Attache, Ministry of Foreign Affairs, Ece Ozkoc, Assistant, Turkish Industry and Business Belgium Association (TUSIAD) Tania Rabesandratana, Reporter, Research Europe Alessandro Palmero, Head of Unit and Desk Officer Sara Ramirez, Policy Officer, America Unit, Ministry of (MERCOSUR), European Commission: Directorate Foreign Affairs, Sweden General for External Relations Tracey Ramsubagh, Second Secretary, Embassy of Massimo Parnisari, Head of Unit, Multilateral economic Trinidad and Tobago to Belgium affairs and non-EU Western Europe, Council of the Günter Rauer, Minister Counsellor, Embassy of Germany European Union Directorate ‘Development and ACP, to Belgium multilateral economic affairs‘ Daniel Rincón, Consultant South America, Environmental Mário Parrot, Financial Management of EAGF, European Policy Centre (ENHESA) Commission: Directorate General for Agriculture and Rural Juan Antonio Riviere Marti, Adviser, Policy and Strategy, Development European Commission: Directorate General for Competition Petra Pavsic, Assistant, Fundacion Comunidad Jérôme Roche, Deputy Adviser, European Centre of Valenciana-Region Europea Employers & Enterprise Providing Public Service (CEEP) Patricia Rodriguez Fortun, Project Manager, Gérard Taquin, Principal Administrator, Internal Market, Fundacion Comunidad Valenciana-Region Europea Council of the European Union: Directorate General for Christopher Rodriguez Molina, Public Relations Manager, Internal Market, Competitiveness, Industry, Research Finance & Planning International Group Tristan Terryn, Assistant, Council of the European Union: Antonio Roldán Monés, Parliamentary Advisor to Ramón Directorate General for Economic and Social Affairs Jáuregui MEP, European Parliament Manuel Tovar, Trade Attaché, Mission of Costa Rica to the EU Osvaldo Rosales, Director of the Division of Yudai Ueno, First Secretary, Mission of Japan to the EU International Trade, United Nations Economic Sahika Ugtu, Assistant, Turkish Industry and Business Commission for Latin America and the Caribbean Association (TUSIAD) Headquarters, Chile Iker Urdangarin, Assistant, CSR Europe Rafael Sabat, Minister Counsellor, Commercial, Jorge Valdez, Ambassador, Mission of Peru to EU Mission of Chile to the EU Pedro Valente Da Silva, Administrator, European Antonia Sariyska, President, European Confederation Parliament DG Expo Thematic Department of Junior Enterprises (JADE) Jean-Francois Vallin, Foreign Affairs and Security and Marcos Rodrigues Savini, Second Secretary, Defence and Human Rights Sub-committee and ACP, Group Energy and Environment, Mission of Brazil to the EU of the Progressive Alliance of Socialists and Democrats (S&D) Elena Scaramuzzi, Senior Analyst, Cullen Céline Van den Abeele, Advisor, Latin America, European International Savings Banks Group/World Savings Banks Institute (WSBI) Peter D. Schellinck, Chairman, Schellter Strategy Leander van Laerhoven, Adviser, BUSINESSEUROPE Consults Marc Van Montagu, Chairman, Ghent University Albert Schram, Advisor Research Funding, University Piet Van Waeyenberge, Chairman, De Eik of Maastricht, The Netherlands Luc Vandenbroucke, Senior Vice President, Barco Michael Scott, Freelance Journalist, Mike Scott Maarten Vanderhaeghe, Senior International Trade Communications, United Kingdom Specialist, White & Case Mette Sicard Filtenborg, Head of EU External Carlos Vanderloo, First Secretary, Mission of Canada to the EU Assistance Section, Permanent Representation of Asta Venckute, Policy Adviser to Vilija Blinkeviciute MEP, Denmark to the EU European Parliament Cliff Simon, Director, Europe Office, Energy Experts Maria Eugenia Villegas Terán, European Affairs Advisor, International Regional Office of the Government of Cantabria in Brussels Michel Stavaux, Managing Partner, Officium Jan von Herff, Head of Division for Economic Consulting GEIE and Trade Policy, BASF, Germany Jacob Stroh, Assistant - European Industrial Policy, An Vranckx, Guest Professor, Gent University Faculty Federation of German Industries (BDI) Representation of Political and Social Sciences to the EU Andrew Willis, Journalist, Understanding China, Viktor Sukup, Principal Administrator, European EUobserver.com Commission: Directorate General for Development Hinnerick Winterberg, Advisor, European and and Relations with ACP States International Economy, Agricultural Policy, Marcela Szymanski, Director, Kreab Gavin Anderson Deutscher Bauernverband João Pedro Taborda, External Relations Director, Europe, Philip Worman, Director, Eurasia Group London Offices, Middle East & Africa, Embraer, France United Kingdom Friends of Europe – Les Amis de l’Europe Bibliothèque Solvay 137 rue Belliard, B-1040 Brussels, Belgium Tel.: +32 (0) 2 737 9145 – Fax: +32 (0) 2 738 7597 Email: [email protected] – Website: www.friendsofeurope.org Latin_America_EU_partnership_cover_17-08-10.indd 2 31/08/10 07:16