Toward a biregional agenda for the twenty-first century

Crawley, Andrew

The Rio Summit among the European Union, Latin America, and the Caribbean of June 1999 was, by definition, a historic event, despite a good deal of media commentary that viewed the results as modest. With 48 countries represented, all but two by heads of state or government, it was one of the biggest meetings of national leaders in the history of the Western Hemisphere and the first summit at such a high level. Independent of the concrete outcomes, the fact that it was held is symptomatic of the substantial transformations that have occurred in Europe, Latin America, biregional relations, and the international system during the past decade.

By very publicly demonstrating the EU's capacity to harmonize the distinct interests of its member states into common political and economic positions, the summit reflected the Union's increasing maturity as a single political actor on the global scene. It exemplified Latin America's growing appeal to industrialized countries as a political and economic partner in the developing world. And it illustrated the potential for resistance, by most countries of the West, to the dangers of unipolarity inherent in the postCold War environment (Cuba was invited; the United States was not).

Thus the Declaration of Rio, issued at the conclusion of the summit, referred to the nations' "firm rejection of all measures of a unilateral character and with extraterritorial effect"-a clear though not explicit reference to the 1996 Helms-Burton legislation. It noted the determination of the parties involved to "tackle the global drug problem under the principle of common and shared responsibility," in implicit contrast to Washington's use of unilateral sanctions against producer countries. It further announced the countries' pledge to "actively participate in the design of a new international financial architecture" and their promise to cooperate in "advancing the process of reforming the United Nations system" (Council of the EU 1999a). The focus was as much on international regimes for global governance (trade rules, capital flows, drugs, the environment, security) as on the purely biregional themes of European-- Latin American relations. The sense was of an effort to build a biregional constituency on such issues, one that could withstand pressure from the only remaining superpower.

In the wake of the Rio Summit, this article reviews the background and development of European-Latin American relations in the past two decades, the current state of transatlantic links, and the short-term prospects for the relationship. It rests on several premises. First, changes in the international system during the past decade and the momentum of the European integration process have obliged the EU to strive to establish itself as a single, coherent political actor in international affairs. Second, the strategies that the EU adopts to pursue that goal, in terms of both its international political partnerships and its foreign economic policy, will help determine the future of what used to be called the West, and therefore of the international system. Third, the EU and Latin America constitute the bulk of the West, and the ways in which they work together will therefore condition the role of each of them on the international stage.

Fourth, for more than two decades, European-Latin American relations have been nourished by a particular discourse that has stressed the two regions' unique cultural affinities and common values. This has been a valid approach, but it might be insufficient to sustain a solid partnership in the new global context of the twenty-first century. Fifth, there is some danger that the political capital that has accrued to Europe from its activism in Latin America-as a result of the EU's political and aid-- related engagement with the region-might be offset by a failure to make corresponding commitments in the commercial sphere. Sixth, if the political dimension of biregional relations is balanced by more innovative trade strategies, the two regions can find common cause in building a real biregional agenda for the twenty-first century.

In exploring these premises, this paper is divided into four sections. The first addresses the background and context of EU policy toward Latin America. The second examines some key political components of the relationship. The third explores biregional economic relations and the future of commercial links. The final section makes some recommendations toward a biregional agenda for action in the early years of this new century.

EUROPEAN VALUES

The precipitous end of the Cold War conferred responsibilities on Europe that the European Community could not inconsequentially abdicate, as the sense of vindication in the West came encumbered in the Old World by a series of new concerns. In the political sphere, the evident triumph of western democracy might, on the one hand, make it less necessary for Europe to worry in the future about perceived excesses of superpower security policy. If such excesses did recur, on the other hand, the collapse of one of the superpowers posed the danger of leaving fewer constraints on the other.

In the economic sphere, the victory of western capitalism raised, on the one hand, the prospect of greater global well being. On the other hand, it prompted the risk of perceived excesses in "Anglo-Saxon" neoliberalism.

The West had apparently won, but the victory revealed that the industrialized West was scarcely homogenous in its international interests and outlook, and that a new international system dominated excessively by the wishes of one hegemon might not, over the long term, be in Europe's best interest. Therefore the end of the Cold War, which seemed to mark victory for the West, simultaneously raised the stakes in the process of determining what kind of West, and therefore what kind of world, would endure.

The end of the Cold War, moreover, coincided with developments of historic import in Europe. In the EC, the mood had been grim for much of the 1980s. Integration seemed to have stalled. The effects of the recession of the 1970s, with its rising inflation and surging oil prices, had given rise to a list of European failings and a lack of EC competitiveness. "Eurosclerosis" and "Europessimism" were terms coined to characterize the situation and the mood (Laurent 1994). In 1987, however, a complex series of amendments to the Community's founding Treaty of Rome was embodied in the Single European Act (SEA), the most important element of which was a commitment to create a single European market by 1993. The SEA signaled a fundamental change in the EC's international standing. The SEA suggested that the Community would be a very different organization, with significant consequences for its place in the international system and for its international partners, as it set a target for the completion of a single market and laid the foundations for economic and monetary union (IRELA 1994, 513). In 1992, with the Maastricht Treaty, the EC evolved main into the EU.

The international context and developments in Europe, then, virtually dictated that the EC strive to establish a stronger political identity, as a single, coherent actor, on the world stage. The Community was already an economic superpower by virtue of the sheer significance of its economy, but the region's global political profile remained somewhat understated. The strength of the alliance between Europe and the United States was not to be doubted, nor was the basic consensus on that alliance's "western values." Given the concerns prompted by the dissolution of the Soviet Union, however, and the apprehensions about the only remaining superpower dictating the international rules of the game, it seemed prudent for the EU to stress a subset of "European values" to which other countries and regions of the world might subscribe.

In the broadest terms, such values concern the role of the state in domestic policy and the responsibilities of states in international affairs. To a greater or lesser extent, the EU countries have generally been more inclined than the United States to accord the state a prominent domestic role, notably as a source of such social goods as publicly funded health care and education. The state has also provided a social safety net in the event of unemployment, economic regulation to obviate savage excesses in competition, and mediation in industrial relations. Externally, "European values" have taken the form of resistance to unilateralism on the international scene, a preference for arbitration and consensus building over punitive action, and the encouragement of integration among countries.

In European foreign policymaking, efforts to apply the latter approaches are not simply an abstract attempt to raise the EU's political profile. On the contrary, they amount to a concrete exercise in alliance building, an effort to ensure that an international order still in flux will eventually coalesce into something conducive to the pursuit of European interests. Implicit in this approach to external relations is the notion that the EU is engaged in a relatively cordial contest with other centers of political and economic power.

In Latin America, the birth of the "European approach" was induced by the Central American conflicts of the 1980s. Throughout that decade (in what is probably Europe's greatest foreign policy success to date), the EC articulated perceptions of the crisis that were characterized by the view that the conflicts on the Isthmus should be viewed less in terms of East versus West than of North versus South. From this perspective, violence in Central America was the result of ancient inequities that had never been redressed, and of national elites' resistance to the kind of change that would improve the lives of the mass of the population (Trans-National Institute 1984, 10; Grabendorff 1984, 291).

The domestic causes of the armed conflict-poverty, extreme inequality, and the absence of social justice-were therefore seen as much more significant than external subversion. The immediate political cause was seen as the unwillingness of ruling groups in Nicaragua, El Salvador, and Guatemala to respond effectively to demands for reform, and their attempts to exclude from power those forces that sought peaceful change. Following this logic, nonpeaceful change became a viable option in the face of violent repression, and those groups that advocated such change had a strong claim to legitimacy. Therefore only by addressing the local, root causes of conflict and by treating revolutionary movements as legitimate partners in dialogue could a durable peace be assured. These, in broad terms, were the perceptions that formed the basis of the "European approach." They differed markedly from official U.S. attitudes during the Reagan administration; they also had the singular advantage of entailing very little cost for Europe while allowing the EC to occupy all the moral high ground, a deft tactic

With the dissolution of the Soviet Union, this largely implicit competition with the United States for international influence acquired new momentum, and the European approach to Latin America continued to find expression in a policy of contrasts. The EU's formal and reiterated acceptance of the notion of "coresponsibility" in the field of drugs contrasts with the U.S. "war on drugs." EU support for integration in Latin America contrasts with a traditional U.S. reticence toward intraregional cooperation and integration. Similarly, the EU's relative generosity as a donor of official development assistance

In broad terms, the EU's stress on "interdependence" and "mutual benefit" in its relations with Latin America contrasts with what has been broadly perceived in Europe as Washington's exclusive pursuit of national interest in the region. That the EU might have concrete interests to pursue-"supranational" interests-is an issue not often explored.

This is surprising, inasmuch as the quite remarkable expansion of the European-Latin American relationship in the past decade suggests that there are substantial supranational interests at stake. Europe, as a single actor, came relatively late to Latin America. It was just 20 years ago, with the Sandinista revolution in Nicaragua, that the EC became actively engaged with Central America and, subsequently, with Latin America as a whole. Throughout much of the 1980s, however, the level of biregional engagement was modest. Europe did make a major commitment to the reconstruction and pacification of Central America through the San Jose process, but the EC's institutional links and cooperation agreements with Latin American countries and subregions were somewhat limited right up to the end of the decade.' "Traditional" development cooperation with the poorest countries of the region remained the main area for Community activism.

The 1990s, however, witnessed an upsurge in mechanisms for biregional cooperation and political dialogue. At the regional level, the umbrella forum for political dialogue was established by the institutionalization, in 1990, of annual meetings between the foreign ministers of Europe and the Rio Group (Council of the EC 1990). A supplementary EURio Group dialogue on security issues began in 1995. At the subregional level, relations between MERCOSUR and the EU in recent years have developed under an Inter-regional Framework Cooperation Agreement of December 1995, involving ministerial meetings and the institution of a biregional Trade Committee to prepare for a future free trade agreement. The formal start of negotiations for the accord was announced at the Rio Summit.

The San Jose process of annual meetings between the foreign ministers of the EU and the Central American countries reached its fifteenth anniversary in 1999. The formalization of contacts between the EU and countries of the Andean Community, in the wake of their joint declaration on political dialogue of June 30, 1996, has also entailed group-to-group ministerial meetings. In February 1998, the two regions signed an agreement on cooperation and technical assistance for the fight against drug trafficking. The special preferences accorded to the Andean countries within the Generalized System of Preferences (GSP), moreover, which since 1991 has allowed most Andean industrial and agricultural exports free access to the European market, have been extended until December 31, 2001 (IRELA 1999b, 3-C).

At the country level, in June 1996 the EU and Chile signed a Framework Cooperation Agreement that has involved ministerial meetings at the same time as the EU-MERCOSUR ministerial reunions. The preparatory phase for the liberalization of EU-Chilean trade is now complete and, as with MERCOSUR, the official announcement of the start of free trade negotiations was made at the Rio Summit. The EU and Mexico signed an Economic Association, Political Coordination and Cooperation Agreement in December 1997 and a free trade agreement in November 1999, to take effect in July 2000.

In addition, the EU has established programs to foster investment and joint ventures between European and Latin American firms (AL-INVEST), academic exchanges (ALFA), energy cooperation (ALURE), and decentralization and municipal cooperation (URB-AL).Z Total aid flows from Europe (the member states plus the European Commission) grew from $1.69 billion in 1990 to $2.53 billion in 1996 (OECD 1998; IRELA 1999b, 102).

Developments in both regions spurred this expansion in relations. The transition to democracy in Latin America and the unilateral economic liberalization programs undertaken by almost all the countries of the region fostered the growth of a transatlantic agenda that had previously been constrained by the prevalence of authoritarian governments and an inward-oriented development model. On the European side, the regained momentum of the European integration process and the advances toward a single market, single currency, and common foreign policy dictated that the EC or EU strive for more concerted external strategies.

European-Latin American relations in the 1990s therefore have expanded into areas where biregional cooperation was minimal or nonexistent in earlier decades. Relatively little attention, however, has been paid to the more general interests that the EC (and now the EU) has pursued through its activism in these fields. What, therefore, beyond the rhetoric, are the EU's real interests in the region? What goals is Europe pursuing? And how far will it go to attain those goals?

A POLITICAL PROFILE

The Treaty on European Union, signed at Maastricht on February 7, 1992, committed the EU member states to define and implement a common foreign and security policy (CFSP). The aims, as specifically set out in the treaty, are "to preserve peace and international security and "to develop and consolidate democracy and the rule of law, and respect for human rights and fundamental freedoms" (Council of the EU 1992).

Implementing a common foreign policy is not always easy among 15 countries that, on some issues, not least the matter of trade liberalization, simply have different interests. France, in particular, has been reluctant to make concessions on trade liberalization because of its attachment to the common agricultural policy (CAP), while other countries, notably the United Kingdom, have displayed more of a pro-free trade attitude. The governments of the member states, moreover, like the EU's common political and administrative bodies, are subject to diverse influences from industrial and agricultural interests, trade unions, nongovernmental organizations, and other pressure groups. Reconciling the various interests born of transnational and cross-institutional alliances can be a slow process, which complicates the formulation and application of a common policy. Throughout the 1990s, for example, the EU signally failed to adopt a coherent and consistent posture toward the appalling events in the Balkans and Algeria, its own backyard.

In this regard, by contrast, Latin America constitutes an unusually promising partner. Unlike any other part of the developing world, the region offers the EU an easily affordable means of international projection in pursuit of a common European policy that has a reasonable assurance of success. Latin America is unusually susceptible to European activism. Famously described by Alain Rouquie as the Far West (Rouquie 1989), it is the only developing region that has displayed a broadly and predominantly "western" outlook in the postwar period. Longstanding biregional links at the substate level-through the labor movement, NGOs, political parties, churches, and other groups-established a transnational basis for policy at the supranational level. Individually, moreover, the EU member states have no major national interests directly at stake in Latin America and, equally important, none of them has a dominant position relative to the others (IRELA 1994, 381). Policy coherence is therefore much easier to achieve, and the prospects for successful application of a CFSP are correspondingly greater. In sum, it is largely because Latin America is not a priority for Europe that it offers a real opportunity for the EU to establish a "European" political profile on the international scene.

Significantly, a demonstration of the potential of the CFSP and of "European values" can be made precisely at the time that Europe faces major internal challenges like economic and monetary union (EMU) and enlargement to the east, which carry implicit dangers of a protracted period of European introspection. Successful application of a CFSP in one area of the world serves to demonstrate that the EU as a single actor is an international political force to be reckoned with. It also shows that the Union is not solely concerned with the enormous challenges of deepening and widening its own integration process. In the political sphere, then, an underlying incentive for closer European engagement with Latin America has been to devise a common policy that, while promoting a general "western" orientation, is manifestly distinct from that of the United States. Pursuit of this goal is seen to be in the interests of constructing a European political identity with a view to longer-term alliance building. The goal is explicit in the Declaration of Rio. The objective of the meeting was "to strengthen the links of political, economic and cultural understanding between the two regions in order to develop a strategic partnership." The notion of a strategic partnership recurs six times in the Declaration (Council of the EU 1999x).

From the European perspective, this strategic partnership is a rational response to worldwide political and economic trends. It is impelled primarily by a desire to reinforce the EU's political, economic, and cultural presence in Latin America and to regain the ground lost as a result of a change in U.S. policy since the end of the Cold War. Washington's policy shift began with the Enterprise for the Americas Initiative in 1990 and received further impetus from the drive for a Free Trade Area of the Americas (FTAA), which emerged from the Miami Summit in December 1994 (Feinberg 1997; Hornbeck 1998).

To understand the EU's response, it is worth considering the timing of events before the Rio Summit. When that meeting was first proposed, the Clinton administration was still hoping to announce Chile's accession to the North American Free Trade Agreement (NAFTA) at the second Summit of the Americas at Santiago in April 1998. As part of the FTAA process, two meetings of the Western Hemisphere's trade ministers had already been held and a third was imminent. In addition, on November 17, 1995, the trade ministers of the Asia-Pacific Economic Cooperation (APEC) forum had met in Osaka and reaffirmed their determination to establish free trade among their countries by 2010 (for the developed member countries) and 2020 (for the developing countries). The EU consequently advanced a new series of Asia-Europe Meetings (ASEM) between the leaders of the two regions. ASEM I was held in Bangkok in March 1996, followed by ASEM II in London in April 1998. After this followed the 1999 Rio Summit, with its newfound aim of developing a "strategic partnership" that could help secure the interests of both regions.

In the political realm, such interests may lie in social justice, democratic stability, human rights, integration, security, and the fight against drug trafficking. In many of these areas, the EU might exert its most effective influence as an aid donor. Relative to other donors, the EU is by far the most significant source of ODA for Latin America. Between 1993 and 1997, 42.5 percent of Latin America's total aid inflows came from the EU member states and the European Commission, a total of $10.9 billion. The increase in European aid to the region between 1990 and 1996 has dispelled, at least for now, fears that aid flows would slowly shift toward the EU's new partners in Eastern Europe and the Mediterranean Basin.

Indeed, the growth of European assistance clearly sets the EU apart from U.S. activity in Latin America. Between 1991 and 1996, ODA from the United States to its southern neighbors fell by more than 70 percent; therefore U.S. aid as a percentage of total ODA to the region fell from 29 percent in 1991 to just 9.4 percent in 1996. The drastic reduction in U.S. aid to Latin America that year contrasted with a 24.8 percent increase in its total ODA, suggesting that U.S. aid flows shifted from Latin America to subSaharan Africa and Asia (OECD 1998; IRELA 1999a, 2-3).

This level of engagement relative to other donors has fostered a particular image for the EU in its external projection: cooperative, generous, noncoercive, and development-oriented, rather than security-- fixated. It has sought, furthermore, to fortify concrete interests. Europe, like the United States, wants stability in Latin America. It seems clear that over the long term, democratic consolidation will depend on the success of efforts to provide an adequate quality of life for most voters. The latter may then have some stake in the continuation of the existing (democratic) political order, and will be less disposed to support military intervention, guerrilla insurgency, or a populist alternative.

One way the EU can exercise influence through ODA is in efforts to alleviate the region's poverty and inequality. According to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), 36 percent of the region's families live in poverty; this includes the 15 percent that live in "extreme poverty." The absolute number of people living in poverty increased from 135 million in 1980 to 204 million in 1997 (ECLAC 1999, 1). Latin America as a whole is also the world's most unequal region in terms of income distribution.

Unemployment and job creation are attendant problems. Official data suggest that unemployment for the region as a whole now stands at about 8 percent. This figure compares favorably with industrialized countries but masks the large numbers of people who are underemployed, as well as the high percentage of workers in the informal sector. The rate of new job creation in Latin America, moreover, has slowed to 2.8 percent a year, lower than the rate in the "lost decade" of the 1980s. Creating jobs that contribute actively to national development will demand growth; but growth strategies beyond the year 2000 must take account of the existing demographic trends (IRELA 1998a, 3).

The population of Latin America and the Caribbean, now about 484 million, will rise to 620 million in 2015 and about 801 million by 2050. The population of Central America is likely to double over the next 50 years. The problem is not the population growth rate, which has generally been declining throughout the region, but the large numbers of people bom during the previous period of high fertility rates. Some 33 percent of Latin America's population is now under the age of 15 (in the EU, the proportion is 17 percent). Cover the next two decades, therefore, a huge "population bulge" of more than 160 million (equivalent to the current combined populations of Argentina, Bolivia, Chile, Colombia, Ecuador, Paraguay, Peru, Uruguay, and Venezuela) will be entering the school systems and the labor markets.

GDP growth rates of about 7 percent might absorb increases in the labor force, but even higher growth would probably be needed to make any significant headway against under- and unemployment. Such growth rates are not even a medium-term prospect (IRELA 1998a, 3-4). When that population bulge reaches old age, furthermore, it will triple the proportion of Latin Americans who are now older than 65. Ageing populations will be a problem elsewhere, notably in Europe and Japan; but resource-rich countries with stable institutions and extensive networks of (public or private) social provision should be able to mitigate the difficulties. The phenomenon is likely to be more problematic in Latin America. As a share of the region's total population, the working-age population will be almost the same in 2050 (63 percent) as in 1995 (61.5 percent). The proportion of the population over 65, however, will increase from 5 percent to 17 percent during the same period. To maintain a large elderly population in adequate social and economic conditions will require substantial transfers from the productive output of younger people. These transfers will be possible only if high rates of economic growth are achieved and maintained, to provide the necessary political legitimation (IRELA 1998a, 4).

Democratic stability and social justice are other political areas where Europe can exert influence. By constraining channels for political representation, weak or incomplete democracies live under the constant threat of social and political unrest. Political instability hinders economic stability, discourages investment, undermines public finances, prevents the modernization of Financial markets, and impedes the upgrading of infrastructure. It is therefore in Europe's interest to support the consolidation of stable and open political systems in Latin America that can generate a lasting consensus on the basic principles of the social and economic order.

Most specifically, sustaining the rule of law, particularly an independent and efficient judicial system, is essential to ensure respect for civil liberties, to facilitate successful private enterprise, and to guarantee foreign investment. EU support here would be mutually beneficial, moreover, because it would reinforce the development of the region's economies as reliable business partners.

It would benefit Latin America's interests even further if the EU could apply a common European cooperation policy for its aid donations, or at least establish greater coordination among the member states. EU aid policies are still largely characterized by bilateralism. Despite the expressed aim of improving infra-EU collaboration (most notably in the Maastricht Treaty), only some European countries have attained greater coordination of their bilateral policies. This impediment limits the effectiveness (and visibility) of EU policy as a whole. As modernization processes in Latin America move on to a new generation of reforms aimed at judicial systems and public administration, more effective coordination of European aid policies would better equip both regions to meet the scale and complexity of the requirements.

The democratization of the Latin American countries has been paralleled by the growing integration among them. Indeed, the depth and scope of the integration processes in Europe and Latin America distinguishes these two regions, and their relations, from the links each region maintains with other areas of the world. Therefore a central pillar of European policy toward Latin America has been, and will continue to be, support for regional integration. To date, this impulse has shaped intraregional relations through the EU's preference for establishing dialogue with country groupings. It has also shaped the content, as evidenced by the substantial financial and technical assistance offered by the EU to integration mechanisms in Latin America, notably the Central American Integration System, the Andean Community, and MERCOSUR.

These efforts continue to be in Europe's interest. Such efforts advance broader goals, such as the promotion of economic and political stability and the creation of new trade and investment opportunities. More immediately, they hold up the EU model of regional and subregional integration, underscoring the prestige and authority of the "West European" model and its values.

From a Latin American perspective, some or the successful elements of the European model might be even more useful if accompanied by the transfer of technical expertise. The need might grow as Latin American integration advances beyond trade to the coordination of macroeconomic policies, the harmonization of standards and legislation, the creation of environmental and social policies, and perhaps the creation of supranational institutions with decisionmaking powers.

Europe has a broad interest in averting conflicts that might threaten regional or international stability. The first major European initiative in Latin America, support for the peace processes in Central America during the 1980s, was largely inspired by fears of possible wider international repercussions of the region's conflicts. An overall goal of EU relations with Latin America will therefore be to ensure that the region remains an accountable partner, sharing positions on crucial security issues, such as the nonproliferation of nuclear and other weapons of mass destruction.

Security issues will probably become an increasingly important dimension of biregional relations. For Europe, one of the objectives of the CFSP will be the extension and consolidation of arms control and nonproliferation initiatives. Another will be long-term preservation of stability. In Latin America, integration should favor the development of closer cooperation on defense and the implementation of confidence and security-building measures, in which Europe already has considerable experience. CSBMs have been a major topic of discussion in the biregional dialogue between the EU and the Rio Group on security issues, leading to a series of biregional conferences that began in Punta del Este, Uruguay, in October 1995 (IRELA 1995).

Europe's immediate security interests in Latin America primarily involve the Malvinas, or Falkland Islands, Britain's Caribbean dependencies, and France's overseas departments. These do not figure directly on the biregional agenda, however, because they are issues in which the member states retain full sovereignty. The rapprochement between Europe and Latin America at the regional level, however, and the climate of cooperation that has developed over the last decade have provided a favorable framework for bilateral relations, thereby helping to ease tensions between individual EU member states and Latin American countries. The more that bilateral relations are framed by biregional understanding and mutually binding agreements, the less likely it is that potential sources of bilateral tension will lead to disputes. For both partners, therefore, biregional dialogue and cooperation serve to sustain conditions that will limit the risk of disputes in the future.

A specific security consideration in European-Latin American relations is the fight against drug trafficking. This issue bears compelling reasons for biregional cooperation. Much of the increasing quantity of cocaine consumed in the EU is produced in Latin America and transported via the Caribbean. Preventing the arrival of even part of this trafFic would be impossible without assistance from Latin American countries, which, in turn, need external help to meet the high cost of controlling drug production and trafficking within their borders. Moreover, the violence, corruption, and instability associated with the drug trade in producer, consumer, and transit countries in Latin America and the Caribbean combine to reduce the long-term effectiveness of EU trade and development cooperation with these regions.

The EU has repeatedly accepted the notion of coresponsibility as a basic principle in combating the illegal drug trade. This position is meant to contrast with the perceived unilateralism of Washington's "war on drugs." Both regions agree, however, that any viable strategy to reduce both drug demand and supply must include efforts to reduce European drug consumption. The notion is referred to in most of the declarations issued by the annual ministerial meeting between the EU and the Rio Group in this decade.

Cooperative projects include the special dialogue with the Andean countries and the EU-Latin American High Level Meeting on Coordination and Cooperation in the Fight Against Drugs, the first meeting of which took place March 224, 1998 (IRELA 19984, 3). At the Rio Summit, the heads of state and government finally endorsed an Action Plan for EU-Latin American Counterdrug Assistance that had been agreed on at a biregional coordination meeting in Panama in April 1999. This plan envisages programs for both supply and demand reduction, judicial and law enforcement assistance, the modernization of customs controls, joint operations on money laundering, and the control of precursor chemicals (Council of the EU 1999b). As with the other political aspects of the relationship, moreover, the European approach (multilateral, unconditional, nondiscriminatory) can be presented as positively distinct from the U.S. approach, another element of a biregional "strategic partnership" that is not evident in interamerican relations.

Such, in very broad terms, are some of the EU's political or, perhaps more precisely, "noncommercial" interests in Latin America. The EU's focus in its alliance building has tended toward the political or developmental areas largely because of the constraints on such an effort in the economic sphere. The fundamental constraint has been the protectionism of the Common Agricultural Policy (CAP), the tariffs of which impede access to the European market for some of Latin America's highly competitive agricultural products, notably meat, cereals, fruit, sugar, Soya, and wine (IRELA 1998b, 2). Concern over the CAP was the main reason the EU member states could not agree, until a week before the Rio Summit, on a formula for trade talks with MERCOSUR and Chile, even though the European Commission had sent the EU Council a negotiating mandate a year earlier.

Throughout the 1990s, perhaps the single most significant policy determinant for most of the Latin American countries was their pursuit of reinsertion into the global economy after abandoning the inward-oriented import substitution model of previous decades. This is precisely the area in which, because of the CAP, the EU has faced the most significant obstacles in its cooperation with the region. While it debated for a year the question of whether to negotiate with MERCOSUR, MERCOSUR itself was preparing negotiations with the United States and the other countries of the Western Hemisphere for the establishment of an FTAA.

The difficulties for Europe were echoed by Brazilian president Fernando Henrique Cardoso on his official visit to Europe in April 1999. Has the EU the conditions to rethink its agricultural problems? If it wants to have a role in the world it must. If it does not want to, all is well; we will talk to the USA-with which we get on very well, I stress very well-(and] with NAFTA. (Publico 1999)

Such sentiments raise questions about the real value of Latin American resistance to the remorseless spread of "Anglo-Saxon" influence, as some European spokespersons have urged. The economic dimension of European-Latin American relations, and particularly the question of trade flows, should therefore be central to any analysis of transatlantic links, because it could determine so much else in the future of the relationship. In 1998, for example, the value of EU trade with the whole of Latin America and the Caribbean (population 484 million) was less than the value of European trade with Switzerland (population 7.2 million) (IMF 1998). This at a time when the U.S. trade representative, Charlene Barshefsky, has predicted that by 2010, U.S. exports to Latin America will exceed U.S. sales to the EU and Japan combined (U.S. Information Service 1995).

Even if this prediction comes only partly true, some questions remain. What might happen to Europe's effort to restore its political and cultural presence in Latin America if more of the products purchased there come from the United States? Can aid policy sustain that presence at a time when cooperation levels are falling? Such questions lead from the political to the economic dimension of biregional relations.

STEPS TOWARD FREE TRADE

Economic relations have generally been substantially less harmonious than the political dialogue, although the EU member states certainly have concrete economic interests in the region.3 In recent years, Latin America has been one of the most dynamic markets in the world for European exports (IRELA 1997, 34-35). It is a large region consisting mostly of middle-income countries with significant demand potential. Its cultural cohesiveness, particularly in language, means that a European firm operating in one country can exploit a neighboring market with relative ease. The drive for integration throughout the region, with its attendant expansion of markets, further enhances the attraction.

The opportunities have been recognized in Europe. Ten EU heads of state or government have visited Latin America in the past three years, some of them more than once, and most accompanied by business delegations. This is an unusual level of economic attention. As with interregional political links, however, matters should be kept in perspective. Latin America as a whole still accounts for only about 5 percent of the EU's extraregional exports, a level that changed by less than a percentage point in the 1990s (IRELA 1999c; OECD 1998).

Such figures can, of course, be used to underscore potential growth, but that approach cannot mask the recent discouraging trends in European-Latin American trade. Throughout the 1990s, the importance to Latin America of its commercial relationship with Europe has fallen relative to the region's links with other partners. Between 1990 and 1997, Latin America's exports to Europe fell from 24 percent to 13.5 percent as a share of total foreign sales; EU exports to Latin America as a proportion of total foreign sales increased less than a percentage point. European exports to the region, moreover, are increasingly concentrated. At the start of this decade, MERCOSUR accounted for about a third of EU sales to Latin America; by 1997 such exports accounted for more than half of European sales (OECD 1998).

Interregional trade has grown substantially in absolute terms, but the overall expansion is very largely because of the increase in Latin American imports from Europe: 164 percent accumulated growth in the 1990s. That, in turn, seems to come largely from the unilateral trade opening by the Latin American countries. Latin American exports to the EU, by contrast, grew by just 29 percent in the 1990s. This is in sharp counterpoint to the 128 percent increase in the region's sales to the rest of the world. Eastern Europe and East Asia have gained at Latin America's expense in the European import market. In the Latin American market, the EU has lost ground to Asia and the United States: the proportion of Latin American imports originating in Europe fell from 21 percent to 16 percent over the past decade, while Asia's share grew from 9 percent to 15 percent and the U.S. share increased from 38 percent to 43 percent.

One determinant of the EU's loss of share was the development of U.S. trade with Mexico. Between 1990 and 1997, the U.S. share of Mexican imports climbed from 66 percent to almost 75 percent. Simultaneously, the EU share was almost halved, from 17 percent to 9 percent (IRELA 1999c, 1). NAFTA therefore seems to have had a diversionary effect on European trade with Mexico.

Given that shift, the possibility of a hemispherewide FTAA by 2005 raises more serious questions for Europe's trade prospects. Some uncertainty remains about whether the FTAA deadline can be met or the entire process can succeed, particularly with U.S. reluctance to use fast-track negotiating authority and Brazil's reticence toward the project. The FTAA negotiations are moving forward nevertheless, and it seems quite possible that the next U.S. president will get some form of fast-track authority.

European concern about the FTAA was manifest in the December 1995 framework cooperation agreement with MERCOSUR; the June 1996 agreement on economic association, political dialogue, and cooperation with Chile; and the December 1997 agreement on economic association, political dialogue, and cooperation with Mexico. Among other things, all these accords contemplate later agreements on progressive and reciprocal trade liberalization. Indeed, Mexico and the EU signed a final free trade agreement on March 24, 2000, to take effect July 1. (For more on the EUMexican agreement, see Jose Antonio Sanahuja's article in this issue).

The formal launch of negotiations between the EU, MERCOSUR, and Chile was the most concrete outcome of the Rio Summit. The European agricultural lobby has estimated that a free trade agreement with MERCOSUR would generate additional costs for Europe of between 5 billion and 14 billion euros a year to compensate European farmers for losses through competition from the Southern Cone. Currently, agricultural and fishery products account for 40 percent of all MERCOSUR exports to the EU. In both sectors the EU has a sizable trade deficit with the subregion, which contrasts with a large surplus in other areas of the economy (IRELA 1998c. 7).

At Rio, however, the leaders of the EU, MERCOSUR, and Chile finally announced the start of negotiations aimed at gradual and reciprocal trade liberalization. The talks will include all sectors, but the results in each case should constitute a single undertaking; there will be no final accord until agreement is reached on all its component parts.

Both sides are still reluctant to accept an accelerated market opening. The EU wants to know the kind of agricultural concessions it has to make in the Millennium Round of multilateral trade negotiations before making major commitments in talks with MERCOSUR and Chile. Brazil, in particular, seems to believe that some of its industrial sectors are not yet prepared for an abrupt opening of markets: the sudden entry of European industrial goods would affect not only Brazil's own production but also Brazilian exports of such goods to its MERCOSUR partners. It therefore seems probable that an EU-MERCOSUR agreement will not be concluded until 2003 to 2005. Assuming transition periods of at least ten years for phasing out barriers to some products, free trade is unlikely before 2015. A substantial level of interregional trade, however (perhaps as much as 90 percent) could be free by 2010 (IRELA 1999e, 7).

It is difficult to predict the specific effects biregional free trade will have on particular sectors (and on the people working in those sectors) by the second decade of the twenty-first century. Both sides, however, should benefit overall. For the EU, trade liberalization with MERCOSUR should prove highly advantageous for European companies operating in the automobile, consumer and capital goods, and service sectors, in which EU exports recorded cumulative growth of over 350 percent in the 1990s. The MERCOSUR countries apply very high national duties in these sectors-up to 56 percent on automobiles and 20 percent on industrial goods. As a result, opening up trade in these fields would prove highly beneficial to European firms (IRELA 1999d, 3--4).

In light of NAFTA's record, the dynamic effects on capital movements of an EU-MERCOSUR free trade accord would probably encourage European companies to relocate productive activity to MERCOSUR, even if not to the extent seen in NAFTA. This type of investment strategy is particularly likely for European companies already exporting to the South American market. They can be expected to try to take advantage of the duty-free conditions with MERCOSUR to supply their regional customers. A broad and inclusive free trade agreement would also enable EU companies already established in MERCOSUR to import their inputs (some of which are now subject to high duties) duty free. In addition, an accord would allow EU companies to take advantage of their experience of operating in integrated, multinational markets. The high added value of European exports to MERCOSUR should translate into higher employment. Finally, the accord should help protect Europe's presence in Latin America from the effects (trade diversion and loss of market share) of a future FTAA (IRELA 1999d, 4).

For MERCOSUR, a trade agreement would primarily mean greater access to the European market for the subregion's agricultural and fishery products. Liberalization of the EU market for MERCOSUR imports will help to reduce the subregion's high trade deficit with the EU, which dates back to 1993. The potential for export expansion is significant. The current relative share of MERCOSUR in the extraregional trade of the EU is minimal. Although within Latin America it accounts for more than half of the Union's trade flows, MERCOSUR itself accounted for only 2.9 percent of total EU trade in 1997 (a similar proportion to that of the 71 African, Caribbean, and Pacific countries) (IRELA 1998b, 7).

A study by Brazil's Getulio Vargas Foundation argues that a trade accord with the EU could benefit MERCOSUR more than participation in the FTAA. According to the foundation's calculations, in Brazil's case, trade liberalization with the EU would stimulate additional economic growth of 5 percent a year, compared with 2 percent from the FTAA. The equivalent figures for Argentina are even more distinctive: 6 percent against 1 percent. Apart from trade benefits, a MERCOSUR association with the EU would strengthen links to the euro zone, which could have a stabilizing effect on the financial systems of MERCOSUR countries and reduce their vulnerability to external crises (IRELA 1998b, 8).

Capital goods account for almost halt the EU's exports to Chile. There are substantial trade and investment opportunities for European businesses in these sectors, although competition from Japan and the United States is strong, particularly in the automobile industry. A free trade agreement with Chile would therefore help to strengthen Europe's position in the Chilean market and could obviate a gradual loss of trade to Asia and the United States. As in all the other sectors, Chile's external tariff is 11 percent (compared with an average 40 percent in MERCOSUR) (IRELA 1999a, 5-6). Chile would receive substantial benefits in agricultural and fisheries products, which accounted for 22 percent of the country's exports to the EU in 1997. Such sales registered average annual growth of about 15 percent in the 1990s, more than double that of the rest of Chile's exports to the European market.

The EU applies relatively high tariffs on imports of agricultural goods from Chile, the maximum being 85 percent. Apart from the common external tariff, the EU also applies quotas on a series of agricultural imports. Given the current level of trade, the size of the Chilean economy, and the trade structure in these sectors, the cost of unrestricted entry of Chilean products into the European market would be less than that for products from MERCOSUR but could still be substantial.

As the newly concluded trade agreement may suggest, EU negotiations with Mexico pose far fewer problems than possible talks with MERCOSUR and, to a lesser extent, with Chile. In global terms, Mexico is a very minor trade partner for Europe, accounting for just one-third of 1 percent of the extraregional trade of the EU. In the agricultural sector, only about 7 percent of Mexican exports to the EU are farm goods, and many of those are not sensitive for Europe. Mexico's weak farm sector makes the country a net importer of agricultural products, in which it has had a trade deficit with the EU for several years. The CAP therefore poses few obstacles to the liberalization of farm trade (IRELA 1998c. 2).

With regard to industrial goods, only a very small share of Mexican exports to Europe are likely to be sensitive. The EU will liberalize 82 percent of its industrial imports from Mexico immediately and the remaining 18 percent in 2003. Again in contrast to some sectors in MERCOSUR, Mexico is unlikely to become significantly competitive in high technology, even in the medium term. No plausible degree of liberalization of industrial trade would allow Mexico to make major inroads in the EU's import market for manufactures. As to the service sector, telecommunications, financial services, civil aviation, and shipping should all be liberalized.

Neither the trade gains nor the trade losses are likely to be major for either side. Commercial gains from the agreement for the EU, at least, will be moderate. Any great degree of trade creation is unlikely; Mexico's average tariff of 13 percent is already fairly low, and the sheer geographic distance between the two sides suggests that the accord will bring relatively fewer benefits than the trade deals that the EU has recently signed with closer neighbors (IRELA 1998c, 3-4).

The main advantage of the EU-Mexico agreement in trade terms will probably be to help offset the worst diversion effects of free trade in North America and to bring each side's share of the other's markets back toward pre-NAFTA levels. This will to some extent counteract Mexico's increasing commercial dependence on the United States, although the effect might not be great. Mexico has concluded six free trade agreements within Latin America in this decade, but the proportion of its trade conducted with the United States has continued to rise (IRELA 1998c, 4).

The more marked consequence of the agreement will probably be in terms of investment. About three thousand European firms are active in Mexico, and almost one-fifth of all flows of foreign direct investment (FDI) to the country come from the EU. Despite a drop in FDI flows in 1996 compared to 1995, the underlying trend is growth in European investment, much of which is associated with the manufacture and assembly of goods for sale in the United States. Lower Mexican tariffs on imported inputs, coupled with more liberal capital flows, could stimulate intrafirm trade and encourage further investment by European companies with those arrangements, subject to compliance with NAFTA's rules of origin.

The new agreement with Mexico and the talks with MERCOSUR and Chile signal the EU's willingness consider concessions to Latin America that might have significant repercussions for the CAP, so far the biggest target of European resistance to liberalizing trade. A new WTO round of negotiations on agriculture calls for reconsideration of the issue, as will the accession of new EU members from Eastern Europe. Some change of focus regarding the CAP is also likely to derive from the growing importance of European industrial interests in the overall trade balance.

In this light, it is unclear whether the Rio Summit represented a new beginning for European-Latin American relations or simply set a seal on biregional trends that were already under way. The latter seems more likely. Before the meeting, the Europeans appeared cautious about accommodating Latin American expectations, and there was some concern that those expectations might be greater than the summit could deliver. In this respect, EU member states seemed keen to use the event as a means of demonstrating how much was already being done, rather than as a means of launching a new phase in the relationship. The level of engagement expressed at Rio might therefore be as far as the EU can go for now in developing its "strategic partnership" with Latin America. Perhaps the next biregional summit, scheduled for the first half of 2002 in Spain under the Spanish presidency of the EU, can further revitalize European-Latin American relations by devising a biregional action plan for the immediate future.

OPPORTUNITIES FOR COOPERATION

It seems probable that early in this new century there will be a more widespread reconsideration of the instruments and institutions of global governance, prompted by the continuing shifts in the distribution of international power. Political power is not wielded in the same way as it was when the United Nations was established. Nor does the international economy work the way it did at the time of the Bretton Woods Agreement. Currently, the debate is largely restricted to proposals for reforming the United Nations; specifically, the structure of the U.N. Security Council. Such relatively minor changes might prove to be insufficient over the longer term. As illustrated by the financial crises of 1997 and 1998, market volatility and investor reactions can have global repercussions, both economic and political.

If sufficient, coordinated attention is not paid to this matter, economic globalization could outpace policy responses in the next few decades. If the pending issues of global regulation are not resolved soon, the global economic system could become increasingly unmanageable. A return to a "regionalist" bias in international relations would undermine much of the effort that Europe and Latin America have already put into expanding their international links over the past decade. Latin America might be absorbed more closely into a U.S. orbit while the EU night focus on its internal consolidation and latent instability on its external borders. If the traditional mechanisms of the multilateral system prove inadequate to the challenges of globalization, the resulting disillusionment would negatively affect European-Latin American relations.

The two regions therefore share a significant interest in seeking a biregional consensus on how to strengthen or reform such mechanisms. The long history of institutionalized dialogue between Europe and Latin America-including consultations in the context of the U.N. General Assembly meetings-provides a solid basis for future cooperation. Indeed, a more positive scenario might call on the United Nations to coordinate the international community's responses to global challenges, such as world poverty, peacekeeping, environmental deterioration, and transnational crime, that individual states can no longer address alone. In that case, a European-Latin American action plan could help ensure that the declared principles of their relationship (consensus, multilateralism, coresponsibility) are effectively translated into concrete action by international bodies addressing global problems.

Substate actors are likely to gain greater weight in international decisionmaking. NGOs, research institutions, and special interest groups are prompted to find new means of transnational cooperation as they acquire greater influence on policymaking. If states cannot establish effective coordination, NGOs are likely to increase efforts to seek effective national and international action on issues of common concern. No two regions in the world currently have such close and longstanding relations between substate and nongovernmental actors as the EU and Latin America. The potential for enhanced European-Latin American activism in this field is therefore substantial. Progress on constructing biregional civil society links could be encouraged in certain specific areas.

First, if regional integration-characterized in Europe and Latin America by cross-border political alliances between parties-continues to develop as it is now, the protection and promotion of citizens' rights will increasingly depend on democratic representation at the supranational level. Those rights (and obligations) seen as common to Europe and Latin America will therefore be fostered by effective interparliamentary relations, established with a shared vision of how to address emerging issues.

Second, the NGOs of Europe and Latin America are particularly well placed to help shape the policy responses to the challenges of the future. They can also promote the progressive convergence of understanding between peoples as to their democratic rights and obligations in a globalized world.

Third, academic links could prove to be decisive for long-term engagement between Europe and Latin America. If current economic patterns do tend toward an intensified regionalization, the current preference of Latin American postgraduates to study in the United States rather than in Europe would probably intensify. Educating an ever-increasing proportion of the region's policymakers and opinion formers in the United States will gradually erode the "common values" said to be shared by the EU and Latin America.

Finally, as the private sector takes more of the lead in the integration processes underway in both regions and as concerns rise about labor rights and standards in free trade arrangements, further engagement between the business sectors and labor organizations of the two regions could help consolidate a European-Latin American strategic partnership. The interregional business forums, which parallel the interamerican trade ministerial meetings, could be a starting point.

The security challenges of the early twenty-first century are likely to include nonmilitary threats, such as organized transnational crime, especially drug trafficking. Interregional cooperation in this area is linked to potentially sensitive questions of state sovereignty, the asymmetry of North-South relations, internal security, territorial integrity, and human rights. At the same time, European-Latin American collaboration in this area is based on the shared recognition that the issue must be addressed in terms that include the reduction of supply and demand.

There are possibilities for enhanced cooperation in this field, although it should be acknowledged that cooperation might face a number of constraints. Given the broadening of the EU's geographic priorities, support for antidrug measures in areas closer to Europe suggests that Latin America will not be the EU's priority area. Financial resources for cooperation will continue to be limited. In this context, European-Latin American cooperation could usefully focus on initiatives to strengthen producer countries' legislation and on the harmonization of legal codes (for example, in the agreements to prevent money laundering and the illicit trade in precursor chemicals).

Over the Longer term, biregional efforts might usefully involve more direct law enforcement cooperation, to the extent that the Union's authority in justice and home affairs progressively broadens. Finally, there is potential in the stated goal of the EU and the United States, in the context of the new transatlantic agenda, to extend their antidrug cooperation to Latin America and the Caribbean. Despite the often-stressed differences between EU and U.S. antidrug strategies, triangular cooperation initiatives will be fundamental in confronting the challenges of the drug trade.

Even if the most pessimistic predictions prove exaggerated, pressure on the environment will remain a matter of concern. The effects of global warming are clearly long-term, and the global climate seems likely to be more uncertain than in the past. Recently, this has been manifest in hurricanes and floods with disastrous consequences for countries in Central America and the Caribbean. As with cooperation on drugs, European-Latin American activism on the environment and, more broadly, on sustainable development--could face constraints. The adoption of binding commitments to protect the environment and natural resources is sometimes seen as disguised protectionism or as a deliberate obstacle to the developing countries' progress toward industrialization and economic growth. Again, however, interregional cooperation begins with some comparative advantages.

The EU has defined the environment as one of the great "horizontal" themes of its cooperation with Latin America (European Commission 1995). Environmental concerns are considered in all European activities in the region. Because resources for the EU's external cooperation programs will probably not increase greatly over the coming years, effective initiatives in this sphere could be geared toward multilateral efforts to curb the deterioration of the environment and foster sustainable development. The follow-up to the Kyoto Protocol on Climate Change of December 11, 1997, and joint undertakings to ensure compliance with obligations on reducing greenhouse gas emissions seem like appropriate areas. Another (albeit with greater potential conflict of interests) is initiatives to incorporate internationally binding environmental standards in regulating world trade, as a means of making trade liberalization compatible with the protection of natural resources.

Even under the most positive scenario of global collective security-- in which international actors increasingly base their global role on economic and technological performance rather than on the traditional military features of state power-there is still substantial room for enhanced EU-Latin American cooperation on defense. Indeed, if broader international acceptance of collective security is to become a reality, it will have to be based on a new system of intra- and interregional security alliances. Despite their many differences, Europe and Latin America share some characteristics of their international security positions. Both have based their security and defense policies on an alliance with the United States. Both sides aspire to a regional integration model that goes beyond trade liberalization, in which the prevention of conflict is a central goal. Finally, both are engaged in a debate on the new regional and international strategic environment, the identification of new security threats, and the ways to address these changes.

In Latin America, much of the debate centers on institutional reforms to address current security threats in a more effective manner than through institutions of the interamerican system, such as the Inter-American Treaty of Reciprocal Assistance (ITRA) or the Inter-American Defense Board (IADB). The debate has prompted efforts to establish confidence and security-building measures (CSBMs) as a means of preventing conflict and heightening transparency. Progress on regional and subregional integration-which in some cases has led to the institutionalization of cooperative security arrangements and improved military-to-military relations-has clearly favored such trends (IRELA 1996, 11-12).

In this field, the European experience seems particularly useful for Latin America. Indeed, Europe's security conditions over the last 30 years have been decisively influenced by the systematic application of CSBMs. Several European institutions have vast experience in the formulation and implementation of a broad range of such measures, from prior notification of military exercises to the protection of ethnic minorities. Much of this experience might be of interest for further Latin American efforts to promote the use of CSBMs and to transform them into mechanisms for crisis prevention.

Europe and Latin America also share common views on disarmament and arms control. All countries from both regions have signed the main international agreement on nonproliferation of biological, chemical, and nuclear weapons. With the Tlatelolco Treaty, which took effect in 1994, Latin America faces no identifiable risk of proliferation of arms of mass destruction (IRELA 1996, 10-11). Still, with the reemergence of nuclear proliferation as an international policy issue-in the wake of India and Pakistan's nuclear tests in May 1998--Latin American countries' contribution to international stability in this field is even more evident.

The risk of proliferation is not limited to weapons of mass destruction. It is increasingly linked to the spread of conventional arms and light weapons, a problem in some Latin American countries that have recently experienced a surge in common delinquency. Initiatives in both regions have addressed this problem. The Inter-American Convention against the Illicit Production of and Trafficking in Firearms, Ammunition, Explosives, and Other Related Materials was adopted on October 17, 1997, against a background of repeated calls by the Rio Group for a regional commitment to fight organized crime, terrorism, and violence (OAS 1997). The European Council, meeting in Amsterdam on June 16-17, 1997, called for a concerted international effort to apply coherent policies on arms exports. The call was followed by the adoption, on May 25, 1998, of an EU Code of Conduct on the Arms Trade. Further interregional cooperation in this field, possibly with the goal of reaching a European-Latin American code of conduct for arms exports, would be in harmony with both regions' security needs.

If the two regions are unable to establish some form of strategic partnership, and if economic trends move the world toward a more explicitly regionalist stage, Europe and Latin America will both incur opportunity costs. In this case, two or three decades from now it might seem that the 1980s and 1990s were the golden age of European-Latin American relations. In some fields, indeed, this might be inevitable. Perhaps the abrupt removal of the predictable Cold War rules has made some international issues too complicated to deal with on a biregional basis. In other areas, however, this is clearly not the case. Both Europe and Latin America derive benefits from addressing some matters biregionally. Neither of them can be indifferent to the prospect that their relationship might be undermined. As the biregional relationship goes beyond the year 2000, its continuing benefits will be conditioned by how Europe and Latin America act in pursuit of common interests.

NOTES

1. The preamble to the Esquipulas peace agreement specifically commends the EC's contribution to the progressive pacification of Central America. The policy of European support was institutionalized in the San Jose series of interministerial conferences between European and Central American foreign ministers, which began in 1994 and continues today as a mechanism of biregional political and economic relations and a means of setting the priorities of development cooperation. For more on EU involvement in the Central American crisis, see Grabendorff 1984; Trans-National Institute 1984; Moran 1985; Whitehead 1992; Rosenberg 1992; Crawley 1993.

2. AL-INVEST, created in 1994, is intended to foster contacts between European and Latin American small and medium-sized businesses to promote biregional trade and investment.

ALFA (America Latina-Formacion Academica), also created in 1994 for a period of five years and later renewed through 2005, contributes to the development of scientific, academic, and technological potential in Latin America through cooperation and exchanges between higher education institutions in both regions. All the EU member states and 18 Latin American countries participate; more than 500 projects have been approved over three years, involving about 350 Latin American and 450 European institutions.

AZURE (Amerique Latine-Utilisation Optimale de Resources Energetiques, 1996), aims to support the modernization of energy systems in Latin America, to promote energy integration, and, over the long term, to develop efficient energy use among large consumers. Latin America also has access to the SYNERGY program, which supports environmentally friendly energy policies. In 1996, 13 percent of the this program's resources, 1.2 million ECUs, went to 10 projects in the region.

URB-AL, 1996, had a total of 21.6 million ECUs and lasted initially for four years. It aims to establish permanent associational networks between cities, regions, and other local groups in the EU and Latin America, principally through biannual meetings between mayors and through eight sectorial "networks" for cooperation among local authorities on projects. The first meeting to create a

network on "drugs and cities" took place in 1997 in Santiago, Chile (see IRELA 1999b, 53; IR Online).

3. Much of this section draws on IRELA 1998x.

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