Lead authors: Iliana Olivié, María Santillán O’Shea.
Section contributors: Damien Barchiche (IDDRI), San Bilal (ECDPM), Fabrizio Botti (IAI), Tiziano Breda (IAI), Alexia Faus Onbargi (IDOS), Ricardo Fuentes Nieva (ODI), Karim Karaki (ECDPM), Niels Keijzer (IDOS), Dora Meredith (ODI), María Alejandra Riaño (IDDRI).

Key messages

The shared values, interests and priority working areas – such as the green, digital and social transitions – between the EU and Latin America and the Caribbean, coupled with the significant development financing needs the LAC region faces, call for strengthened financial relations between both regions. Some dimensions of such relations are already of great relevance, such as FDI, while others, like ODA, are less prominent.

There is ample room for closer financial cooperation in a beyond-aid fashion, not least under the framework of Global Gateway, in a way that maximises the potential of different cooperation tools –strengthened financial instruments but also political dialogue and technical assistance, among others– by engaging with them in a complementary and coherent manner. Linking development and commercial approaches, aligning agendas, sharing lessons learnt, leveraging existing efforts and finding common ground in key areas for both regions –such as the reform of MDBs, debt issues or tax reforms– in bilateral and multilateral settings can help untap the (financing) potential of these bi-regional relations.

Despite their diverse interests and needs in relation to energy transitions and climate action, there is considerable potential for strengthening cooperation, investment and policy dialogue between the EU and Latin America and the Caribbean on the centrepiece of the global development agenda that is the energy transition and the fight against climate change.

To explore and realise this cooperation potential, EU-LAC cooperation could invest in producing a mapping of ongoing cooperation engagements, explore the (un)intended effects of energy transition within the LAC region, strengthen regional cooperation, mobilise development finance institutions, and intensify diplomatic interactions.

Many countries in Latin America and the Caribbean have been victims of a negative cycle of high inequalities, low trust in institutions and democracy, prevalent crime and low economic growth. The nature of this reinforcing cycle, where inequalities cut across societies, is systemic, with the end result of a fragile social contract. Breaking the cycle of exclusion and low trust requires a focus on inclusion and redistribution. As the nature of the challenges related to inequality is systemic, the response needs to be systemic too. An inclusive social protection framework could play a transformative role in strengthening social inclusion and respect for the rule of law.

This joint report was elaborated with the support of the Spanish Ministry of Foreign Affairs, European Union and Cooperation.

See also: Presentation of the European Think Tanks Group (ETTG) Report “A common future for Europe, Latin America and the Caribbean”.

(*) Originally published on the European Think Tanks Group (ETTG) website.