European banks say they are ready to support the green transition in Latin America

Through its Global Gateway investment program, the European Union (EU), through its banks, seems to want to show Latin America and the Caribbean that it aspires to be present in the green, digital and social transformation of the continent. It has already launched several projects: among them, green hydrogen and digital cable.

The global budget of the EU –together with the European Investment Bank (EIB), the Andean Development Corporation (CAF) and the Inter-American Investment Bank IDB) – is 300 billion euros, a high figure with which it hopes to seduce the European business community with more credit lines and subsidies for investments in Latin America.

Félix Fernández-Shaw, a senior executive for the Americas in the EU, pointed out this week at the European-Latin American Parliamentary Assembly (EuroLat) that we have already integrated Brazil, Chile, Argentina and Panama into our BELLA underwater digital connection. We want to include Colombia, Uruguay and Peru as soon as possible. And close the circle with Central America and the Caribbean. This inclusion project goes hand in hand with the investments in green hydrogen carried out in Paraguay, Chile, Colombia and Costa Rica.

To reduce emissions we want to work with all the big cities electrifying public transport. But not only exporting micro buses or buses to the region, but setting up plants to manufacture lithium batteries, explained Fernández-Shaw, who assured that all investments will have European quality in terms of social and environmental aspects.

Also, as it is one of the regions hardest hit by the covid-19 pandemic, within the framework of these investments the inherent in the production of vaccines against the coronavirus in Mexico, Barbados and Panama is contemplated.

* 100011*The development banks present at the EuroLat meeting agreed with the priorities indicated in the Global Gateway program and awaited the specific plans for each of the countries that will make up the meeting scheduled for next July . There will meet 27 European countries and 33 from Latin America and the Caribbean.

In this previous meeting, the IDB reported that 50% of its current financing is allocated to energy, transportation and water and sanitation; 20% to institutional development and governance management; another 20% to health, education and social protection, and 10% to biodiversity and forests.

The MEP for Spain Mónica Silvana González, member of the Development Committee and vice-president of the delegation for relations with countries of Mercosur, said in an interview conducted by the German news agency DW, after the EuroLat meeting: “I think the intention and narrative are good, but what comes to us from Latin American countries is that they want to see investments in concrete. Let us remember that China is an increasingly important vector and not only in the purchase of raw materials, but also in investments in the region. On the other hand, from the European Parliament, we wonder about the impact and efficiency of those funds destined for development cooperation in what the EU has been number one for so long.

However, he added, noting that the European funds are the same as those that had been defined for the next budget period, which should focus on the green, digital and social transition: Regarding this package that is wanted to be made under the heading Global Gateway, it is premature to foresee a balance . It is just beginning to work and we have to see what the EIB, the IDB or the CAF are financing.

Although the EU is very optimistic, they do not forget that this wave of green European investments, originating from global geopolitical changes , arrives in Latin America at a time when, for example, according to UNICEF, one in four children lack vital vaccines, which pushes immunization coverage rates backwards by three decades.

As MEP González warned: How did the investments materialize so that countries can produce vaccines? Why is Cuba, which has the most experience in the region, not included in the Global Gateway project on vaccines? If education in the region already had large inclusion gaps, the pandemic generated a silent educational crisis that kept many students out of schools for 70 weeks. But Fernández-Shaw saw a positive side in that: It is not just an investment agenda, but rather has a public policy approach, centered on the human being. The digitization of rural areas will allow remote territories to enter the 21st century.

Europe knows that much of the cobalt, copper and lithium it inevitably needs for its green transition is in Latin America and the Caribbean. And that is where their banks are looking (and investing plans). However, the voices are not all in favor.

MEP González warned about the need to apply control mechanisms, focused on the new European rules, on deforestation, due diligence and management of critical raw materials. And she closed the DW interview with a painfully ironic question: We advocate not abandoning traditional governance and utility programs. But what good would the investments of Global Gateway and development banks in the green economy be if the population is dying due to lack of access to vaccines? The transition would be digital, yes; green, yes, but fair?

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