In preparation for the EU-CELAC Summit scheduled for July 17-18, 2023, in Brussels, a key event took place last week, the 15th International Economic Forum on Latin America and the Caribbean organised by the OECD. This discussion brought together eminent panelists and experts to understand the challenges of a new bi-regional partnership for sustainable development.
RIDHE, in its capacity as a liaison office between Latin America and the European Union, attended this discussion and would like to share the key points that were addressed.
An economic perspective on EU-CELAC Cooperation
The 15th Economic Forum highlighted the importance of cooperation between the European Union and the Latin American and Caribbean region in promoting sustainable development. The pillars of this cooperation include governance, sustainable investment, the environment, and productivity, to create a green and digital transition that meets today’s global challenges.
The LAC region has great potential, with rich biodiversity, lithium reserves, and clean energy sources. However, it faces challenges such as social inequality, poverty, informal employment, and vulnerability to climate change.
Cooperation between the two regions must be based on climate justice and the protection of human rights. The similarities between LAC and the EU, particularly in terms of economics, democracy, multilateralism, and sensitivity to the rights of women and the LGBTQI+ community, can be exploited to create a long-lasting partnership.
LAC countries are invited to foster economic growth while preserving the environment and promoting the participation of all sectors. This means developing sustainable infrastructures, creating new sectors focused on the circular economy, following the global agenda, and promoting social development. This approach will reduce the high rate of informal employment and create new opportunities.
Thus, sustainable cooperation between the EU and LAC is needed to address the region’s social and environmental challenges, while leveraging its potential for green energy development, digital transition, and global food security.
Key investments to ensure a green, just, and digital transition in the LAC region
To ensure this triple transition, it is necessary to engage all countries and all stakeholders in the fight against climate change to strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development (Goal n. º 17 of SDG). One solution is to consider the Bridgetown Initiative, which addresses the needs of countries facing debt and liquidity problems by proposing measures to stimulate investment in sustainable development goals and reform the international financial structure.
If actors invest 20% in sustainable development in Latin America, it is possible to increase job creation by 10% by 2030. To ensure the green transition, the speakers gave examples of best practices and investment initiatives to be taken. In Colombia, public policies are addressing the issue of land-use management and access to water to cope with the consequences of urban durability. In Chile, lithium resources make it possible to create new sectors to develop the conditions for exploiting this mineral and generating added value. In Brazil, the country enjoys enormous advantages in terms of access to land and natural resources to produce wind and solar power and green hydrogen. It is possible to create high-value-added products, such as the transformation of hydrogen into green ammonia, for local fertilizer production. These initiatives will help to decarbonise the production matrix, improve public services, and meet social and environmental expectations.
To function properly, the international community must recognise natural resources such as water and forests, demonstrating that these green assets are essential to the region’s development. Recognition of these resources as humanity’s heritage is one way of tackling these challenges.
Thus, these initiatives require smart investments and synergy from all actors at all levels of the value chain. It is important to include a differentiated approach based on local, regional, and national realities, as well as pedagogy aimed at shifting mentalities about fossil fuels.
To develop a differentiated approach according to local, regional, or national realities, it is important to consider the human factor, the poverty rate, and the severity of social problems. Meeting the challenges of a three-way transition means understanding the interaction between digital technology and the environment. Hence, to meet the needs of individuals, the creation of ICT networks and infrastructures can guarantee Internet access for 35 million people, and the development of the skills needed to meet the demands of the job market.
To attract investment, it is necessary to define a regulatory framework offering guarantees to investors, thus enabling sustainable investment and the creation of added value in the production chain.
Financing initiatives to meet the challenges of production transformation
To ensure the transformation of production, financial institutions have invested in innovation, diversification, and human capital to meet the challenges of sustainable development in the LAC region. In Colombia, investments have been granted to small producers to diversify production, reduce agricultural risks, and preserve the natural cycle. In Mexico, loans are helping small red fruit producers to build greenhouses and implement drip irrigation to regenerate soil and mitigate carbon dioxide emissions. In El Salvador, the banking sector has been transformed to be more inclusive, considering factors such as gender and particular periods such as pregnancy, single parenthood, illness, or death. This form of inclusion helps women engaged in informal activities to live with dignity during these periods. In Brazil, Lula’s government has demonstrated its commitment to sustainable development by financing both existing tools and new ones involving new partners to invest in climate funds. In this way, the national bank is contributing to a productive and sustainable economy by introducing lower interest rates for projects that support climate objectives.
To achieve results, investments in LAC countries must focus on large-scale projects such as water purification or the financing of electric buses. It is essential to secure the support of the private sector, use hybrid financing and mobilise investments in high-risk areas to attract financial flows to the countries.
In conclusion, both regions need to converge in their pursuit of investment, mobilising private funds with a catalyst effect from public funds. Cooperation between the LAC region and the EU must contemplate differentiated responsibilities following public policy priorities.