First China, Now Europe: What Does Latin America’s Prioritization Mean for Business?

Governments across Latin America are taking steps to reshape their relationships with other countries in efforts to make partnerships more equitable. As Latin American leaders put Latin America first and take more control of their national resources and industries, private sector representatives should use this opportunity to engage in sustainable partnerships with Latin America, especially in growing industries like renewable energy and digital services such as fintech.

Latin America’s relevance has peaked in recent years as global leaders such as the United States and the European Union have realized China and Russia’s increased presence in the region. By 2020, China’s trade with Latin America had grown 26-fold over two decades—reaching $310 billion—replacing the EU as the second largest trading partner, following the United States. In South America, China surpassed the United States to become the region’s top trading partner. These advances have led the European bloc to take a more proactive approach (more so than the United States) to strengthen EU-Latin America relations, particularly as Spain claims the presidency of the EU Council.

What once sounded rhetorical recently culminated in the first  Community of Latin American and Caribbean States (CELAC)-EU Summit in nearly a decade, held on July 17-18 in Brussels. The 50+ nations attending the summit discussed trade promotion, sustainable digital and economic development for both regions and future pathways for collaboration. The summit gave way to a series of headwinds, including the EU’s commitment of over 45 billion euros to support more than 135 projects in Latin America until 2027 as part of the Global Gateway Investment Agenda (GGIA)—the more sustainable alternative to compete against China’s One Belt One Road Initiative. It also resulted in a series of bilateral agreements between the EU and Latin American countries with a focus on new sources of energy and raw materials. This allows for the EU to move away from Russian and Chinese dependency while Latin American countries can shed previous extractivist frameworks and reshape partnerships that will support domestic growth and development.

Still, the summit didn’t come without its challenges, and a key point of contention was the Russia-Ukraine conflict. While EU leaders wanted to consolidate a joint and clear condemnation of Russia and their actions in Ukraine, not all Latin American leaders agreed with the approach. The final statement expressed “deep concern on the ongoing war against Ukraine,” but the lack of Russian condemnation indicates some Latin American countries are not willing to close the doors to potential collaboration with Russia or any other non-Western ally, like China.

As Latin America continues to seek new partnerships and take a leading role in structuring negotiations to benefit their country and the region, there are an increasing number of opportunities the public and private sector can capitalize on. These opportunities are particularly blooming for green and renewable energy, raw materials and digital transformation, and they have the potential to be mutually beneficial to both parties’ human and economic development. As stakeholders take advantage of the circumstances, there are a few key points worth keeping in mind to meet Latin America’s leaders where they’re at.

1. Awareness of local context: Despite its largely shared historical, cultural and linguistic roots, Latin America should not be treated as one indistinguishable region. Countries are significantly diverse in terms of political ideologies, socioeconomic development and societal issues. Therefore, each step in the approach must include thorough localization to ensure resonance and penetration.
2. Always anticipate change: Often described as a pendulum, Latin American governments shift between left and right, with divisions more and more widening towards extremes. These imbalances have led to shorter government terms and an increase in political violence.
3. Leverage the power of relationships: To establish a strong foothold in the region, engaging with a breadth of stakeholders across all sectors and ideologies is central. Especially with government structures and representatives constantly undergoing changes, strengthening these relationships will ensure we always have allies on our side.