The outcome of the European elections will have a significant impact on the EU’s economic relations with Latin America and the Caribbean (LAC), Americas Quarterly reports.
During her first presidential campaign in 2017, Marine Le Pen addressed a roaring crowd in the southeastern city of Lyon, denouncing the policies of globalisation and open borders. “Our leaders chose globalisation, which was supposed to be a happy thing. It has turned out to be a terrible thing,” she declared on behalf of a reinvigorated French right-wing. This narrative has since become increasingly popular in the political sphere of the so-called old continent, and last week’s EU elections confirmed the trend.
The significant increase in support for the far right in the EU parliamentary elections did not result in them gaining a majority, as the centrist coalition will retain control, but their increased influence – 18% of the total 720 seats – may raise concerns about potential repercussions in a number of countries and regions around the world. For Latin America, there is every reason to keep an eye on the consequences. Trade, immigration and investment issues in the Western Hemisphere may appear in a new light due to changes at the EU legislative level.
Shifts in trade policy
The European Parliament has significant legislative, budgetary and supervisory powers. As co-legislator with the Council of the EU, the Parliament can propose, amend and veto laws in various policy areas. In addition, the Parliament oversees the EU institutions, especially the European Commission, where it can approve or dismiss the Commission and has the power to express no confidence in it. It also has budgetary powers, allowing it to approve, amend or reject the EU’s long-term and annual budgets, and to approve or reject international trade agreements.
Changes in the composition of the Parliament could lead to shifts in trade policy, development aid and co-operation initiatives. The new Parliament could potentially affect the flow of resources to Latin American countries to support strict human rights, democracy and environmental standards in the region.
Echoes of EU-LAC relations
The EU’s shift to the right will be emphasised in July when Hungary’s far-right leader Viktor Orbán rotates into the presidency of the Council of Ministers, the EU’s most powerful body, which includes heads of government. Orbán’s presidency could change the EU’s position on a number of critical issues, given his party’s controversial positions on migration and climate, affect EU-Latin American trade and economic relations, environmental initiatives and the allocation of development aid and cooperation programmes.
The outcome of the European elections will have a significant impact on the EU’s economic relations with Latin America and the Caribbean (LAC). According to the European Parliamentary Research Service, trade between the EU and the Community of Latin American and Caribbean States (CELAC) reached nearly $328 billion in 2022, making CELAC the EU’s fifth largest trading partner after the US and China.
In the same year, Latin American and Caribbean countries received $224.6 billion in foreign direct investment (FDI), 55.2 per cent more than in 2021. According to the Economic Commission for Latin America and the Caribbean (ECLAC), the EU was the second largest investor (29 %) just after the US (38 %). The EU invests heavily in sectors such as manufacturing, energy and banking. However, the EU’s bias towards economic nationalism may encourage European companies to divert investment to the domestic market, depriving LAC of vital capital inflows.
EU’s stance on climate change
The rise of right-wing groups could also change the EU’s stance on climate change, migration and economic policy in the region. The increasing influence of climate-sceptic parties such as the Dutch Freedom Party led by Geert Wilders could diminish the EU’s role as a global leader in the fight against climate change and jeopardise projects such as the EU’s cooperation with CELAC on the EU’s Global Gateway Investment Programme and LAC, which aims to increase renewable energy capacity in the region. EU funding and expertise for such projects could decline, jeopardising conservation and sustainable development efforts in LAC that depend on this support.
Meanwhile, shifts at the national level in Europe towards a nationalist economic agenda that prioritises domestic companies over foreign competition, such as Giorgia Meloni’s “Italy First” economic programme or the protectionism of the French National Association, could threaten existing EU-LAC trade agreements. Diplomatic and trade relations with economic and political blocs such as Mercosur, a regional integration initiative including Argentina, Brazil, Paraguay, Uruguay and Venezuela, could be seriously disrupted. The EU-Mercosur deal has already been frozen; in March, French President Emmanuel Macron called it a “very bad deal,” citing the lack of stronger climate commitments. It seems that the outcome of the EU parliamentary elections may have sealed its fate.
Migration is an important issue
Migration represents another potential flashpoint. EU humanitarian aid has helped Latin American countries such as Colombia and Ecuador respond to the migration crisis in Venezuela. Earlier this year, the EU Commission allocated almost €130 million in humanitarian aid to the region.
In Central America, €17 million will go to support the response to major humanitarian crises, mainly caused by chronic violence and large numbers of displaced people, while Haiti will receive €20 million in humanitarian aid through the recently launched Humanitarian Air Bridge. However, the gaining strength of the far-right may favour immigration restrictions over aid, leading to a breakdown in channels of cooperation.
What’s next
The rise of far-right populism in Europe and Latin America features charismatic leaders who use anti-establishment rhetoric and prioritise law and order. Leaders such as Le Pen and Meloni have won support by positioning themselves as outsiders challenging the political elite and promising tough immigration controls and new economic policies.
In Latin America, Javier Milei and Nayib Bukele exemplify this trend. Milei’s libertarian and bold stance attracts voters disillusioned with the status quo, which has allowed him to pass radical reforms in Congress even without a majority. At the same time, Bukele’s anti-crime policies have helped him consolidate power and maintain his popularity despite concerns about human rights abuses.
Even if the centrist coalition retains control in the EU Parliament, the increased representation of the far-right could have implications for crucial areas in Latin America – and at this stage, issues such as trade, investment, and climate co-operation and migration are by far the most vulnerable. Only time will tell the intensity of the consequences that are already looming.
