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The IDB promotes dialogue and cooperation between the European Union and Latin America and the Caribbean

As part of a program of side meetings organized in conjunction with the annual meeting of the IDB Board of Governors, a dialogue was held on Europe-Latin America relations.

Taking part in the dialogue were the President of the Inter-American Development Bank, Enrique V. Iglesias; Roberto Formigoni, chairman of the steering committee for the IDB’s 2003 annual meeting in Milan and President of the Lombardy Region; Romano Prodi, President of the European Commission; Eduardo Frei, former president of Chile; Javier Pérez de Cuellar, former United Nations secretary-general; Giulio Tremonti, Italian Minister of Economy and Finance; Mario Baldassarri, Italian Deputy Minister of Economy and Finance, and other distinguished figures.

Among the issues highlighted in the dialogue were the following:

The relations between the two regions are bound in history, culture, economics and politics. Settlement, independence and nation-building in Latin America and the Caribbean have strong roots in Europe. For more than four centuries the region’s ties with the world economy were largely routed through Europe. Business, education, immigration and politics brought the peoples of the two regions together. The channels of interaction penetrated all levels of society: central governments, states, subregions, municipalities, political parties, labor movements, church groups and national and community organizations.

The twentieth century has seen great diversification of Latin America and the Caribbean’s international relations and a growing influence of North America and Asia. Meanwhile, after centuries of conflict, Western Europe has joined together in an unprecedented process of deep integration which now expresses itself in the European Union (EU). Moreover, the Union is now looking east and is on the threshold of receiving ten new members.

The broadening of Latin America and the Caribbean’s international relations is being driven in part by the autonomous and centrifugal forces of globalization. Latin America and the Caribbean moreover has been confronting the challenges of globalization through courageous national political and economic structural reforms coupled with vigorous participation in the multilateral system. In addition, in the management of their new interface with a globalizing world economy the governments are increasingly pursuing support through initiatives to strengthen regional and interregional ties. This is being done through formal regional integration, trade and other agreements as well as cooperation initiatives.

It is in this context that the EU and Latin America and the Caribbean have been increasingly deliberate in pursuing closer interregional relations. The basic foundations for formal initiatives have moreover been very strong, not only because of historical roots but also contemporary realities: the EU is a major trading partner and the main source of foreign direct investment for Latin America and the Caribbean; it is by far the principal source of development aid and economic cooperation as well as an inspiration for best practices in public policy, including regional integration, where Europe has long been a leader.

The Rio Summit of June 1999 and the Madrid Summit of May 2002 marked a new height in interregional relations because, for the first time, Latin America and the EU interacted as two blocs in search of cooperation for common goals. The breakdown of the Cold War has helped to bring the world closer together in a democratic setting of shared basic values. But the designs for building a world community on these fundamental values are not homogeneous and many configurations are possible. The EU and Latin America have used the Summits to work together to put their stamp on this evolving process. Indeed, EU-Latin American interregionalism at the Summits has expressed itself in joint interest on many important world issues; for example, democracy, human rights, multilateralism, improvement in the design of the international financial architecture, regional integration, tackling of the drug problem under the principle of common and shared responsibility and promoting sustainable development. This developing partnership will be reviewed and strengthened next year in the biregional Summit in Mexico.

While the Summits are the highest expression of EU-Latin American inter-regionalism, the emerging Association Agreements between the EU and the region are the deepest. These agreements represent a maturing interregional relationship because they are based on the principle of reciprocity. The agreements are moreover very innovative in terms of establishing developed and developing country links, because they integrate under a single umbrella three vital areas of interaction: reciprocal free trade, cooperation and political dialogue. Path-breaking Association Agreements have already been negotiated with Mexico and Chile. An association agreement negotiation is currently underway between the EU and Mercosur with the ninth meeting just having successfully concluded in Brussels. Meanwhile, Central America and the Andean Community will soon begin negotiating political dialogue and cooperation agreements with the EU which, as expressed in the Madrid Summit, should lay the groundwork for Association Agreements. For its part, the Caribbean is strengthening its ties with the EU in the context of the Cotonou Agreement.

The regionalism that Latin America and the Caribbean is practicing with Europe is part of a broader regional approach which includes political commitments to deep subregional integration among like-minded neighbors and an array of free trade areas. This strategy is meant to complement and strengthen the region’s participation in the multilateral system and the world economy. Subregional integration initiatives like Mercosur offer many opportunities for development and social inclusion of peoples and locals and hence political commitment must be redoubled to move these processes forward even under current difficult circumstances. In recognition of regionalism’s important role in development, the IDB has made support for it one of the central pillars of the Bank’s Corporate Strategy.

EU-Latin American and Caribbean interregionalism is a critical development tool because of the promise of better and more secure access to European markets in areas where Latin America and the Caribbean has a comparative advantage, cooperation programs, transmission of best practices and a stronger voice in international forums on issues of mutual interest. The interregionalism with Latin America is also important for the EU as an expression of its global positioning in an increasingly competitive world economy where the scope of market participation is a strategic dimension of broader world leadership in multilateral rules, politics and cultural development.

Europe is a vital shareholder in the IDB. The growing interregionalism of the EU and Latin America and the Caribbean has strengthened the potential of this partnership. It is in this context that the European Commission and the IDB are increasingly working together for the development of Latin America and the Caribbean.

The European experience offers many insights for the Bank’s support of development of its borrowing member countries. Regional integration of course stands out as an example, as does the strategic role of European subregions and locals in providing legitimacy to integration processes. But so does the continent’s concern for areas such as sustainable development and the rule of law. The Lisbon strategy is an expression of the need to improve social cohesion through proactive efforts to reduce poverty and provide social protection. Since poverty and social inequality continue to be major drags on the modernization and political stability in Latin America and the Caribbean there is a clear coincidence of interest here as well.

The collaboration between the Bank and the Commission gained formal expression in the signing in 2002 of a Memorandum of Understanding (MOU) between the European Commission and the IDB to work together in four basic areas: (i) consolidation of democracy and human rights; (ii) social equity and poverty reduction; (iii) regional integration and trade; and (iv) information technologies and a shared knowledge society.

The MOU has already borne fruit for the two organizations. In preparation for next year’s Summit in Mexico, Commissioner Chris Patten and President Enrique Iglesias are opening in Brussels in June of this year a major seminar on Social Cohesion. The seminar will analyze the problems of inequality and social exclusion and ways to overcome them. Later, in July, the Commission and the IDB are collaborating on a conference in Lima, Peru, for the Andean Community, in which representatives from the two regions will dialogue on their respective experiences in consulting with civil society during the course of integration and trade initiatives. Meanwhile, the Bank and the Commission recently completed a joint regional programming exercise in Central America and have jointly met with the Caricom Secretariat in Guyana to discuss cooperation. The two organizations also have provided financial support to the “Sciences‑Po” Mercosur Chair Expert Group on negotiations for a EU-Mercosur Association Agreement. This is only the beginning of the collaboration, as other activities are in different stages of planning and organization.

In conclusion, the spirit of the ideas considered here reaffirms the conviction of the participants in widening and deepening Latin America and the Caribbean’s current relations with the EU:  in political consultations between Heads of State and Government;  in the acceleration of the processes of trade negotiations under way, such as that currently taking place between Mercosur and the EU;  in the institutional  modernization of the region; and in support for the consolidation of democratic institutions with full respect of human rights.

An expanded and deepened cooperation  between Latin America and the Caribbean and the European Union not only will operate to the benefit of both parties, but also to that of the international community, contributing to understanding among our peoples, economic progress and social justice.

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