From the 16-17th May, European, Latin American and Caribbean Heads of State and Government will congregate in Lima, Peru, for the fifth EU- Latin America and Caribbean (LAC) Summit. Delegates will examine specific initiatives on the two major themes of the meeting, “Poverty, inequality and inclusion” and “Sustainable Development: the environment, climate change and energy.”

To mark this occasion, Canning House, London, held a discussion on the summit on the 22nd April 2008. The purpose of the discussion was to analyse the two themes: poverty and sustainable development. The panellists included Ricardo Luna (Ambassador of Perú to the UK), Iztok Mirošič (Ambassador of Slovenia to the UK), Chris Wood (Foreign & Commonwealth Office), Armando Barrientos (University of Manchester) and Enrique Mendizabal (ODI).

Ricardo Luna (Ambassador of Perú to the UK) provided a succinct introduction to current relations between the EU and LAC.

- The EU is the main donor in LAC. The main legal instrument governing European Community cooperation with Latin America for the period 2007–13 is the Development Cooperation Instrument. For Latin America the total amount for 2007–13 is EUR 2.6 billion.

- In 2005, 39.8 % of the population in LAC were living in poverty and 15.4 % were extremely poor.

- EU is recipient of 15 percent of all LAC trade and is the second-largest trading partner of LAC after the USA.

- LAC has 5 out of the 10 most biodiverse countries in the world, namely, Brazil, Colombia, Ecuador, Mexico and Peru.

The Ambassador stressed that the summit was a ‘significant occasion’ and provided an excellent opportunity to produce commitment on the summit’s agenda. However, he acknowledged that there had been ‘systemic resistance’ to tackling poverty in LAC which will continue to present a serious challenge.

Iztok Mirošič (Ambassador of Slovenia to the UK) pointed that out that the 2008 EU-LAC summit was an ideal occasion to reaffirm commitment to the Millennium Development Goals (MDGs).

- Summit priority will be to formulate synergies between addressing climate change and poverty alleviation.

- The European Investment Bank (EIB) currently has 15 agreements with LAC countries.

- The new EIB external mandate provides for a total volume of lending for the seven-year period 2007–13 amounting to EUR 27.8 billion, of which EUR 2.8 billion are earmarked for Latin America.

Chris Wood (Foreign and Commonwealth Office) reiterated that climate change was just as much a development, security and prosperity issue as an environmental one.

The strategic partnership between the EU and LAC provided an appropriate space for joint action on poverty and climate change. He made reference to the British Prime Minister’s MDGs Call to Action. The summit is an appropriate forum to build support for the Call to Action and create renewed momentum on MDGs.

Drawing heavily on a recent speech made by the UK Environment Minister, Hilary Benn, Chris Wood went on to speak predominantly on the sustainable development theme:

- First: A goal is required – The European position states that a rise of no more than 2 degrees Celsius needs to be agreed internationally if we are able to avoid dangerous climate change.

- Second: Once this goal is secured, we need bigger and ambitious commitments from developed countries.

- Third: The development of a strong global carbon market is required. Possible options to deepen and expand the Clean Development Mechanism and European Emission Trading Scheme need to be considered.

- Fourth: A global deal on climate change needs to be fair. Equity is a global social justice. The EU needs to support a new model of development which assists developing countries in avoiding the carbon intensive route taken by industrialised countries. The UK’s Environment Transformation Fund, has pledged £1.6 billion to support developing counties in financing low carbon development and climate adaptation.

- Fifth is adaptation. LAC countries have played a central part in the climate change debate and negotiations. Likewise, the EU’s strong position on climate change suggests that the summit is an ‘important opportunity’ to set out a ‘shared vision’.

Armando Barrientos (University of Manchester) provided an intriguing up-date on some of the new policy responses to poverty and exclusion in LAC. Some regional examples include:

Bolivia’s Bonosol - http://www.bonosol.bo/

Ecuador’s Bono de Desarrollo Humano -  http://www.pps.gov.ec/PPS/PPS/BDH/INF/QuienesSomos.aspx

Mexico’s http://www.oportunidades.gob.mx/

Chile’s Solidario - http://www.chilesolidario.gov.cl/?language=english

- Although poverty alleviation has been a stop-start process, poverty is now falling although not uniformly across the region (CEPAL, 2007).

- New responses to poverty in the region have the potential to make a significant reduction in poverty and exclusion in the region

- Latin Americans show public perceptions of poverty similar to those prevailing among Europeans

See attachment for full presentation

Enrique Mendizabal (ODI) emphasized that knowledge is the most important commodity between the EU and LAC.

- LAC is no longer part of the 20% club which is characterised by needing development aid to survive, but rather part of the 0.2% club which are not entirely dependent on aid. In other words, LAC countries are less likely be recipients of aid from the EU, but more likely to be partners.

- Resources allocated for LAC should be assigned to create partnership as opposed to more traditional approaches which have done little to solve some of the problems associated with donor-recipient agreements.

- ODI’s work in LAC such as the Evidence based Policy in Development Network - EBPDN and the Trade and Poverty in Latin America programme (COPLA) is committed to strengthening partnerships between UK thinktanks and LAC research institutes.

- Taking into account LAC progress in some development areas and public policy reform, there are considerable opportunities to connect polices on poverty and the environment.

- The BRICS (Brazil, Russia, Indian, China and South Africa) should arguably now include Mexico considering its economic progress

- Since the September 11th attacks, LAC migrants have been coming to the EU instead of the US.

- A particular challenge will be the way in which national and international corporations in LAC encourage graduates to return home to work, instead of settling permanently in Europe or the US.

- The influx of LAC migrants is creating a demand for Latin American products to be sold in the host countries. An increasing number of LAC companies are setting up businesses in the immigrants’ host countries to meet this demand.

- The threat posed by melting glaciers and water insecurity in the Andean region could result in local people having no choice but to resort to violent protest.

Questions and discussion:

- There was concern that none of the panellists had discussed the EU’s Common Agricultural Policy. Considering the importance of agricultural trade between the EU and LAC, the EU should be doing more to adapt its agricultural policies to reflect a better understanding of its effects on developing economies in LAC. The summit would be an ideal forum to do this.

- The increasing number of cases where LAC countries have nationalised foreign companies, has caused alarm with investors and raised the question of investment security in the region.

- Members of the audience, including the Cuban Ambassador to the UK, hoped that the summit might provide an appropriate space to discuss the normalisation of relations with Cuba and address legal aspects to the Helms-Burton Law. However, as the EU’s Common Position on Cuba will not be reviewed until June, the summit will not provide an official platform for debate.

- Concern was also expressed at the unique and vulnerable position of many of the Caribbean states, which are under threat from raising sea levels. It was hoped that the region, with a population of 30 million people, would be properly debated at the summit.

Although not raised at the discussion, there are additional issues that need to be addressed at the summit:

- An International Labour Organisation (2006) report on indigenous peoples and the MDGs, based on case studies from Guatemala and Bolivia, found that indigenous peoples were largely excluded from the MDG process. Bearing in mind that indigenous peoples make up over 10 percent of the LAC population, the summit should address this issue and particularly indigenous peoples’ important position at the interface between various ecosystems and climate instability.

- Although LAC has over 30 percent of the Clean Development Mechanism’s (CDM) registered projects worldwide, CEPAL (2006) suggested it is still too modest an incentive for countries to embark on the path to creating low carbon economies. With roughly 64 percent of CDM projects located in Asia, concerted efforts will be needed to increase LAC’s competitive edge by diversifying the scope of CDM projects. A greater number of projects in the renewable energy, mining and transport sectors will be required, whilst ensuring poverty and sustainable development considerations are advanced simultaneously. Reform of the CDM process will also need to be part of the discussion, given the vast transaction costs and overly bureaucratic procedures involved.

- Does the increasing amount of trade between Asian countries and LAC represent a challenge to the EU-LAC strategic partnership?

Keywords:  Canning House, EU External Relations, Peruvian Presidency, ODI, CDM, ILO & CEPAL