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EU’s influence push in Latin America dented by Ukraine clash

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Picture: Simon Wohlfahrt/Bloomberg/Taken on July 17, 2023 – President Luiz Inacio Lula da Silva and head of the European Commission Ursula von der Leyen in Brussels.The EU will help invest over 45 billion euros ($50.6 billion) in Latin America and the Caribbean until 2027, von der Leyen says.

By Jorge Valero, Maria Tadeo and Samy Adghirni

Leaders of the European Union (EU) are seeking to reboot relations with Latin America in a competition for influence against Russia and China, but wrangling over Moscow’s invasion of Ukraine is hampering their efforts.

The EU will help invest over 45 billion euros ($50.6 billion) in Latin America and the Caribbean until 2027, Ursula von der Leyen, the head of the European Commission, said at a business conference Monday ahead of a two-day summit in Brussels with leaders from the regions.

The funding – which would come from a combination of EU funds, member states’ contributions, development banks and the private sector – will be focused on areas including clean energy, critical raw materials, health and education.

A key goal for Europe in the summit is seeking stronger support for Ukraine in its efforts to counter the Russian invasion, reduce China’s sway and ensure access to critical raw materials for its digital and green transition.

But diplomats are clashing on a possible statement to mark the end of the summit. The EU wants a section condemning “the ongoing war against Ukraine”, deploring “in the strongest terms the aggression by the Russian Federation” and demanding “its complete and unconditional withdrawal”, according to a draft seen by Bloomberg.

Latin American and Caribbean countries, however, prefer to “express concern” about the war and support efforts for an immediate cessation of hostilities, the draft shows.

Cuba and Nicaragua are among the main countries blocking a harder stance in the statement against Russia over its invasion of Ukraine, according to two people who asked not to be identified discussing confidential talks.

“The war at the heart of Europe throws a blanket of uncertainty on the world and channels for war purposes resources that were until then essential for the economy and social programmes,” Brazilian President Luiz Inácio Lula da Silva said at the business roundtable. “The arms race makes it even more difficult to face climate change.”

The EU and the Mercosur countries – Argentina, Brazil, Uruguay and Paraguay – have been in talks to try to clinch a trade accord for more than 20 years. But the Latin American countries have balked at the EU’s Green Deal and rules to reduce CO₂ emissions that include strict conditions to gain access to the European market.

“We want to discuss today how to further connect our people, how to further connect our businesses, how to de-risk, how to strengthen and diversify our supply chains and how to modernise our economies in ways that reduce inequalities and benefit all,” von der Leyen told reporters earlier as she welcomed Lula.

By announcing the €45 billion (about R912.5 billion) investment goal, the EU is trying to compete with Chinese influence in the region. Spain is planning to help provide some €9.4 billion worth of public funding, using a mix of development funds, export credits and other tools.

Von der Leyen said all the objectives she set out are “within reach if we get the Mercosur-EU agreement across the finishing line”. She added that the EU “will invest strongly in Latin America and the Caribbean”.

Lula told reporters his country wants to share its “intense economic activity” with EU and Mercosur partners. “And more importantly, we want to deepen with the European Union the discussion – not only about industrial development and economic growth – but we want to deeply discuss the climate question,” he added.

Bloomberg’s Lyubov Pronina, Joao Lima and Sofia Gerace contributed to this report.

This article was first published on Bloomberg