How Germany could gain influence in LatAm

LatAm’s resources are becoming a pivotal issue in many countries’ investment agenda. Germany is primed to replace many competitors in this regard.

Many world powers have been scrambling for resources in LatAm, with oil and minerals being the most sought after. Countries like Canada, the United Kingdom, the United States and China have been at the forefront of the exploration and extraction. Now, however, new players have come into the fold, Russia and South Africa being two of them, the other, acting more aggressively perhaps, is Germany.

German involvement has an opportunity to strengthen in Brazil, which previously had been leaning towards the Asian side of the equation, receiving big ventures from Russia, China and India, not surprising due to Brazil’s belonging to BRICS.

But Brazil as of late has been unable to fully comply with the expectations set for them by other BRICS countries. With the alliance deteriorating, the regional trading bloc Mercosur gains a more privileged position in Brazil’s national economic agenda, and Mercosur is already in negotiations with the EU regarding a free trade agreement, which should grant Germany access to a promising, but so far unexplored market.

Argentina is another regional player that has developed strong economic ties to China, particularly during the Kirchner administration, where Cristina Fernandez argued: “How can we leave out 1.353 million people, the first actor in world economics, which has a permanent seat in the UN Security Council?”

Times are different now. Current president Mauricio Macri told German Foreign Minister Frank-Walter Steinmeier that Germany would become one of Argentina’s most important trade partners. Macri and Steinmeier will meet again this month, as Argentina’s president travels to Berlin following Germany’s support of Argentina’s new economic course. Besides the close relationship, Argentina is also a key actor at Mercosur, and negotiations with the EU are underway.

Other important Latin American nations have been following a similar path, although in a considerably more independent fashion.
The Konrad Adenauer Stiftung, a German foundation interested in promoting the values of liberalism and democracy has been closely following Latin America’s turn away from socialism. They wrote: “More and more governments in Latin America, like in Mexico, Chile or Colombia, support a course of economic liberalism. A continuation of this trend is seen in the recently elected President Pablo Kuczynski in Peru.”

All of these factors signal the opening of many doors for German investment. As previous regional players lose some momentum, contracts and reservoirs become available as a pretext for cooperation. LatAm recognizes the position of power that Germany occupies within the EU and is keen to capitalize on its influence to acquire long lasting deals.

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