By Andrew Hammond

Latin America has beforehand been known as the “misplaced” or “forgotten” continent, but it’s now assuming a a lot greater strategic significance, particularly within the wake of Russia’s invasion of Ukraine.

For many years, the area was typically missed by some key Western powers — particularly a lot of Europe — on condition that its financial development typically was not as quick as that of Asian rising markets, whereas its poverty was not as nice as that in a lot of Africa.

But for the reason that warfare in Ukraine started, European consideration has rapidly turned to this huge continent, which is residence to half a billion folks, the world’s largest reserves of arable land, plus large quantities of wider assets, together with vital minerals and the biggest share of renewables on the earth.

Final month, UK International Secretary James Cleverly gave a speech in Chile through which he argued that the “tectonic plates of world politics are shifting as soon as once more,” with “Latin America’s demographic and financial weight … giving extra voice and extra affect.”

Particularly, he known as for Brazil to be given a everlasting seat on the UN Safety Council, and argued that the UK is the area’s “oldest buddy,” some two centuries after bilateral ties had been first established.

Nevertheless, it’s the EU that is perhaps warming its ties with Latin America on the quickest tempo. Equally to authorities within the UK, key figures throughout the 27-member bloc acknowledge the area’s large future potential. The EU’s international coverage chief, Josep Borrell, even stated final month that this rising market has the potential to develop into the Arabian Gulf, given its vital mineral belongings, reminiscent of lithium.

This rising significance of Latin America to Europe was additionally showcased within the EU’s new International Gateway technique. And likewise by the foremost, intensified push to lastly safe a commerce deal between the EU and Mercosur, the Southern Frequent Market, making a mixed market of about 720 million folks.

The EU’s flagship International Gateway technique is mobilizing as much as €300 billion ($328 billion) of funding globally for sustainable, high-quality initiatives between 2021 and 2027 in areas such because the inexperienced and digital transition, transport and vitality infrastructure, well being, training, expertise and analysis, and sustainable finance.

Examples of initiatives that the EU is embedding in Latin America, particularly, as a part of the technique embrace vital uncooked materials worth chains for lithium and copper, inexperienced hydrogen manufacturing, and the growth of electrical energy transmission networks.

Constructing on the technique, the EU can also be making an enormous push for a commerce take care of the Mercosur bloc: Brazil, Argentina, Uruguay and Paraguay. This has been agreed in precept however efforts to finalize it have been frozen. The set off for the present intensified push to get it concluded isn’t solely that Europe is aware of it urgently must diversify its commerce hyperlinks and develop into much less depending on Russia and China for its uncooked materials worth chains. As well as, the departure of controversial Jair Bolsonaro from the Brazilian presidency on the finish of final 12 months has added to the political “window of alternative” to get a deal over the end line.

Throughout her main official go to to Latin America final week, European Fee President Ursula von der Leyen pledged together with Brazil’s President Luiz Inacio Lula da Silva and Argentina’s President Alberto Fernandez that the Mercosur deal can be concluded by the tip of this 12 months. This echoes calls from different senior European politicians, together with German Chancellor Olaf Scholz, who stated throughout a visit to Argentina final 12 months that “the negotiations have now lasted lengthy sufficient” and he and different EU companions need the settlement to be ratified in 2023.

The EU-Mercosur settlement has been within the making for greater than 20 years, throughout which two-way commerce has elevated even and not using a finalized deal, and each side need the talks expedited forward of a key EU-Latin America summit on July 17-18. Whereas the settlement was formally concluded in 2019, each side are nonetheless advocating for extra clauses.

This would possibly sound simple. Nevertheless, there’s a hazard it might end in earlier, fastidiously negotiated financial trade-offs throughout the wider deal being reopened, which dangers inflicting extra delays.

As an example, Lula has stated: “I’ve religion that we are going to announce this Mercosur settlement quickly however with higher high quality to make sure that Latin American international locations can have an industrial coverage.”

He needs to reorient the commerce relationship with the EU away from the prospect of Brazil merely being a large agricultural powerhouse for European customers, and reopen negotiations so as to add provisions referring to reindustrialization, know-how switch, and wider points reminiscent of human rights.

On the European aspect, the 2 important units of considerations focus on agriculture — a key concern for France, which is Europe’s largest producer on this sector — and Brazil’s commitments to deal with deforestation.

On the latter difficulty, a number of EU international locations, members of the European Parliament, and activists have expressed grave considerations concerning the destiny of the Amazon rainforest, and the European Fee is negotiating extra textual content within the settlement with Mercosur that would come with extra sustainability commitments.

EU commerce negotiators final 12 months introduced an extra doc to the Mercosur international locations to attempt to assuage considerations in Europe about these points, particularly deforestation within the Amazon. The European Fee hopes this extra instrument will avert the necessity to utterly reopen the broader commerce settlement.

Taken collectively, for this reason a window of alternative would possibly now exist to get the commerce deal over the road earlier than subsequent 12 months’s EU election campaigning begins, thereby cementing the deepening of ties between the 2 regional powers.

Nevertheless, if an settlement can’t be concluded within the subsequent six months, it’d properly get pushed out past subsequent 12 months, on condition that the subsequent European Fee, which can come to energy within the second half of 2024, would require time to settle in and begin delivering on its priorities.

• Andrew Hammond is an affiliate at LSE IDEAS on the London Faculty of Economics.