Olaf Scholz looking for a partner in South America

When asked about the goals of his visit, the otherwise sober Olaf Scholz became almost effusive. “Latin America has incredible potential,” said Scholz, and in general, issues such as the expansion of renewable energies, ecology and sustainability are just as much on the agenda there as they are in Europe.

Hymns of praise from January 2023, before his trip to Brazil, Argentina and Chile? One might think, but Scholz said this almost exactly ten years ago in April 2013 – not as chancellor, but as Hamburg’s first mayor before his one-week trip to South America.

So it almost seems as if time has stood still in the relationship between Germany and the region. For decades, Latin America has been hailed as an equal partner, sharing the same culture, values ​​and interests. A lavishly declared Latin America offensive by Germany or the EU is chasing the next one, and Günter Maihold is slowly getting tired of hearing it.

The deputy director of the Stiftung Wissenschaft und Politik is already afraid of the same headline that could accompany Scholz’s trip this time: “‘Germany is rediscovering Latin America’.” Or, what would be even worse: “Humboldt is activated again as a historical reference, although he was never able to travel to Brazil, for example.”

“Common basis is crumbling”

Maihold analyzed the relationship between the EU and Latin America for the Berlin think tank, and his conclusion is far from being so positive. “The common basis is crumbling,” says his paper. The policies of both Berlin and Brussels have led to serious ruptures throughout Latin America in recent years. The EU, for example, has not made itself popular by refusing to supply COVID-19 vaccines and by agitation against Chinese vaccines at the same time. The sanctions policy against Russia was also met with rejection on the subcontinent. “Brazil is highly dependent on fertilizer imports from Russia. Argentinian President Fernández was in Moscow shortly before the start of the war and touted his country as Russia’s gateway to Latin America,” says Maihold. One should therefore “not have too many illusions” about strong support for the German position on Ukraine.

China has long come to stay

If you look at the latest survey by the renowned opinion research institute Latinobarómetro, you can get a glimpse of how the balance of power in the region has shifted in recent years. When it comes to human rights, environmental protection and the promotion of democracy, Germany and the EU are still seen as partners, but when it comes to science and technology, the name China is mentioned almost without exception.

Germany’s share of Brazilian imports has shrunk by almost half to 5.1 percent over the past 20 years. Meanwhile, China is Brazil’s largest supplier with 22.8 percent and also the clear number one as a buyer of Brazilian goods.

“China is interesting for Latin America because it comes without great conditions. Not every project attaches importance to democracy, the rule of law, environmental protection and corresponding studies. And when in doubt, China also comes with its own workers and implements strategic infrastructure projects,” says Maihold . “Although of course there is also a certain reservation as to the question of what kind of influence is exercised.”

Green hydrogen from Chile, lithium from Argentina

For Brazil, Argentina or Chile, Germany is a bit like the old school friend who knocks on the door every few years, toasts to the mutual friendship and old times and then quickly disappears again. A strategy that is clearly reaching its limits in view of the difficult geopolitical world situation. According to the Latin America expert, Scholz’s task on this trip is also to make clear the difference to China, which only has the fast export of raw materials in mind.

“In the case of lithium, for example, it is expected that processing, if not in the respective producing country, would at least be offered on a regional scale with the development of regional value chains from Germany.” Pure investment interest is no longer enough today, says Weinhold integral offer that goes from investment in capital goods to science, technology, processing and marketing and does not reduce Latin America to the role of commodity exporter. More than a ship coming by, loading everything and making it to Germany.”

The talks with Chilean President Gabriel Boric will also deal with the status of the “Task Force Hydrogen”, which both countries founded in 2021 as part of the German-Chilean energy partnership. In theory, Chile could cover three to four times the estimated import requirement for green hydrogen in Germany in 2050.

And Scholz will also talk to Argentinian head of state Alberto Fernández about raw materials, more precisely about the “white gold” of the energy transition: lithium. The German carmaker BMW has been extracting it from a salt lake in Argentina for two years.

Luiz Inácio Lula da Silva wants to support Germany primarily in climate protection. The Brazilian President has announced that he will stop deforestation. “Former President Bolsonaro had dissolved the steering committees that had been introduced for the Amazon Fund at the time,” says Brazil expert Katharina Fietz from the GIGA Institute in Hamburg. “Right after his inauguration, Lula reintroduced these steering committees, whereupon Germany then released 35 million euros for the Amazon Fund again,” says Fietz.

Will the EU-Mercosur Free Trade Agreement become a reality?

For Lula, it’s also about image cultivation, he wants to bring Brazil back onto the international stage after the turbulent Bolsonaro years. The visit of the German Chancellor comes at just the right time for him, as Federal President Frank-Walter Steinmeier had already flown in for his inauguration. French President Emmanuel Macron has also announced his visit.

In the talks with the European heads of government, the free trade agreement between the EU and the Mercosur states will again be at the top of the agenda, which had stalled because of Bolsonaro’s climate policy. Despite resistance from the agricultural lobby, Brazil has a “strong interest in concluding the agreement,” says Katharina Fietz. She assumes that the agreement with the Spanish EU Council Presidency in the second half of this year “will get a new boost, because Spain is also a big advocate of the free trade area”.