European leaders, smarting from high unemployment and dismal approval ratings at home, spent the weekend meeting their Latin American counterparts in Santiago, Chile. One item on the agenda: urging their newly wealthy cousins in South America to invest in the old continent.
“There’s an enormous potential to intensify the investment flow from the region to Europe,” Spanish Prime Minister Mariano Rajoy told an audience of hundreds of business leaders from the European Union, Latin America, and the Caribbean. “Spain can play an important role as a natural entry point for Latin American companies to the European market.”
Rajoy addressed the suit-and-tie crowd a day before heads of state and government gathered for the first summit of the European Union with CELAC, a year-old grouping of Latin American and Caribbean states. The summit attracted over 40 national leaders, from Raúl Castro of Cuba to Germany’s Angela Merkel.
The event underscored the changing relationship between Europe and its former American colonies, whose resource-oriented economies largely avoided the economic crisis that started in 2008. Latin America spent years seeking to attract investment from Europe, the US, Canada, andAsia, offering tax incentives and limiting environmental and labor rules in order to maintain competitiveness, but today it is Europe seeking outside investment.
Rajoy was joined on stage at the business leaders meeting by Irish Foreign Minister Eamon Gilmore, who underscored his country’s “young, highly educated, ambitious workforce.” He saidIreland’s high unemployment was an opportunity for foreign investors, thanks to world-leading “availability of skilled labor.”
Today, unemployment in Spain is at a historic high of 26 percent and Rajoy’s popularity is at a historic low, according to a poll conducted this month for newspaper El País. Meanwhile, Chile’s unemployment has fallen to 6.2 percent, a figure that President Sebastian Piñera referred to last week as “close to full employment.” President Piñera’s popularity climbed from 22 percent to 30 percent over 2012, in part on support for his economic policies, according a December poll by the Center for Public Studies.
For all the talk, the two regions remain far from equal. Tens of millions in Latin America and the Caribbean still live on less than $2 a day and the region lacks basic road and rail infrastructure. These factors — along with economic growth of more than 5 percent a year in countries like Peruand Panama — create local opportunities that make it unlikely for many Latin American investors to expand in Europe.
“Chile is investing mainly in Latin American countries, in the area of retail,” said Oswaldo Marinao, who was at the CELAC-EU summit for ProChile, the country’s export promotion agency.
Business leaders from the US and Germany shook their heads when asked about whether Latin America would soon become a major investor in their countries. The flow, they said, remains mostly about northern companies investing in the south, particularly in electricity plants, mining, and other resource industries.
Regardless, the invitations from Spain and Ireland to invest in Europe show that CELAC may have already accomplished one of its founding goals — greater respect for the region on the world stage.