Uruguay, a country of 3.5 million inhabitants, is a stable democracy with a developed social model, which makes it one of our closest partners in Latin America. While EU-Uruguay relations are close, my visit was the first bilateral one by an HR/VP. I met President Luis Lacalle Pou, Vice-President and President of the Senate, Beatriz Argimón, the Minister of Foreign Affairs Francisco Bustillo and the Minister of Economy Azucena Arbeleche.

The EU by far largest investor in Uruguay

The EU is by far the largest investor in Uruguay, with 40% of the Foreign Direct Investments stock in the country and these investments have grown rapidly in recent years. Over 600 EU companies are active in key sectors: wood pulp, logistics, banking, telecommunications, and tourism. In 2019, the Finnish paper company UPM started the construction of an additional pulp mill and a new specialised port terminal, worth €3 billion, making it one of the biggest private investment in Uruguay’s history.

Wood pulp account for nearly 50% of Uruguayan exports to the EU. We visited the brand new and impressive port terminal, inaugurated by President Lacalle Pou early October. The Uruguayan state accompanied these investments with a new 300 km railway line, linking the pulp mill and the port. This is Team Europe in action: companies from four EU member states were involved in these projects, combining industrialisation, connectivity and innovation.

In terms of trade, however, China has become Uruguay's main export market and the Uruguayan government, tired of waiting for the EU-Mercosur agreement, intends to negotiate a bilateral free trade agreement with China. We must realise that if we do not take steps to strengthen our ties with Latin America quickly, others will take our place. However, if China has become the largest buyer of Uruguayan agricultural products, we continue to be the ones who help bring productive capital and technologies to the country.

Uruguay a leader in renewable energies

Uruguay is also a world leader in renewable energies thanks to a stable and favorable investment regime. Its power production is almost fully coming from renewable sources (97%), due notably to major hydropower capacities. Uruguay also intends to develop a green hydrogen production. The German company Enertag has recently announced an investment of $800 million to produce 15,000 tons of green hydrogen per year. In Uruguay, and more broadly in Latin America, there are major opportunities for the development of green energy, to advance the global green transition.

In Uruguay, and more broadly in Latin America, there are major opportunities for the development of green energy, to advance the global green transition.

After Uruguay I went to Argentina with which I have a special personal relationship: it is the country where my father is born. I had the opportunity to discuss bilateral and global issues with President Alberto Fernandez, Vice president Cristina Fernandez de Kirchner, the Minister of Foreign Affairs Santiago Cafierio, the president of the Chamber of Deputies, and the Chief of Government of the city of Buenos Aires Horacio Larreta. Before I leave, I will also meet with the Minister of Economy Sergio Massa.

I started my visit in the "Parque de la Memoria", a park dedicated to the memory of the 9000 victims that were murdered during the military dictatorship. It is located on the coastal strip of the Río de la Plata in Buenos Aires, a testimony of the fate of many of the victims who were thrown into the river from airplanes. I was accompanied on this visit by Norma Hochbaum, the director of the Park, and by descendants of the victims. It was a moving experience, in particular, to be confronted with the dramatic fate of the more than 400 children of the victims, who were abducted by the military and placed without knowing their true origin. Thanks to the DNA database built by the courageous grandmothers of “Plaza de Mayo” some have been able to recover their identity and learn who their real parents were. One of them told me about his painful experience. It was also very moving because right now we hear reports of similar crimes being committed by Russia in Ukraine. Next year, Argentina will celebrate the 40^th anniversary of its return to democracy. This is an important reminder of how fragile democracy remains and how high the price is when it is overturned.

Next year, Argentina will celebrate the 40^th anniversary of its return to democracy, a reminder of how fragile democracy remains and how high the price is when it is overturned.

Argentina, a country of 46 million people and the third largest economy in Latin America, is facing a difficult economic situation. The inflation rate already exceeds 70% per year and the economic rebound of 2021 and early 2022 has ended. Due to the massive costs of imports of gas and oil at high prices, the government had to tighten capital controls and the Argentinian economy is expected to experience a recession, aggravating poverty and social tensions.

EU companies have been present in Argentina for over 100 years

The EU has deep economic ties with Argentina: we are Argentina's first investment partner and second trading partner outside Latin America after China. EU companies have been present in Argentina for decades, some for over 100 years, and they hold 44% of the foreign investment stock in the country. They have accompanied the country throughout all the economic ups and downs, employing hundreds of thousands of people in Argentina (around 290.000 direct jobs). In contrast, like in Uruguay, Chinese investment has been very limited in Argentina until now, concentrated in a few sectors (e.g. lithium mining) with minimal employment.

Lithium, a key asset for Argentina

Lithium is a key asset for Argentina and an essential component of electric vehicles batteries. Bolivia, Argentina and Chile form the ‘lithium triangle’: they are the three leading countries for lithium reserves globally. Chinese companies are active in Argentina in this sector. The only EU-led lithium project in Latin America is currently the French ERAMET project in Argentina. It should start producing over 20,000 tons of lithium per year from 2023. For the time being, the European Investment Bank does not fund mining activities due to environmental concerns. However, given the importance of lithium for the green transition, we have started to adapt this policy. Our cooperation with Latin America in that area should not concentrate only on raw materials. We should also help build local industrial value chains around these raw materials.

Argentina also has an important potential as an exporter of energy – natural gas as well as wind and solar energy. However, to develop, the sector needs large investments, which requires a stable and trustworthy investment climate. We are preparing a Memorandum of Understanding on energy cooperation with Argentina, covering LNG, green hydrogen and other energy sources.

After the EU-CELAC ministerial meeting, I also visited the Rio Negro province in Patagonia, a sparsely populated region, to launch a programme to support civil society projects. With an amount of €6.3 million, it will be the most important of such programmes ever in Argentina. I used this opportunity to meet the governor of the Rio Negro province, Arabela Carreras, and discuss her ambitious projects regarding Green Hydrogen production. On Monday I will also meet the Governor of the Neuquen province and visit INVAP (Investigación Aplicada Sociedad del Estado), a Argentinian High Tech Company, who built the country's geostationary telecommunications satellites, ARSAT 1 and 2, launched in 2014 and 2015 by the European company Arianespace. At that time, Argentina was among the eight countries developing its own geostationary satellites. The Argentinian economy is much more than meat, soya and wine: it has also impressive capacities in high tech and we intend to develop our cooperation in that field.

In both Uruguay and Argentina, I discussed the Russian war against Ukraine and its consequences. Both countries have been very supportive to Ukraine in the UN General Assembly and other multilateral fora. My interlocutors confirmed their firm commitment to defend the territorial integrity of Ukraine. They are also willing to work for peace and help put a rapid end to this war.

The Russian war of aggression reinforces the urgency of strengthening the links between the EU and Latin America to preserve an international order based on international law.

The Russian war of aggression reinforces the urgency of strengthening the links between the EU and Latin America to preserve an international order based on international law, respect for the territorial integrity of states and fundamental human rights. Europe is also looking for reliable partners not only on energy and commodities but also on high tech and industrial value chains to strengthen our respective strategic autonomies. There is certainly scope for increased trade and investment between the EU and LAC countries.

Latin America expects not only words from us but actions

My Uruguayan and Argentinian interlocutors share the idea that this strengthening would be in our common interest. However, they expect not only words from us but also actions. This primarily concerns the completion of the EU-Mercosur agreement, which we have been negotiating for 20 years. In my view, it is much more than a trade agreement; it is the way to concretise this strategic link between Europe and Latin America. The ball is in our court: we are working to present to Mercosur a proposal for an "additional instrument", seeking to clarify the mutual commitments on issues such as deforestation, preservation of biodiversity and implementation of the Paris Agreement.

Having neglected Latin America for too long, the European Union has no more time to lose. My Uruguayan and Argentine interlocutors made this very clear to me. This issue was also at the centre of the discussions during the CEPAL and EU-CELAC meetings. I will come back on these events in another blog post.