Byting back: The EU’s digital alliance with Latin America and the Caribbean

Summary

• China’s and Russia’s growing presence in Latin America and the Caribbean undermines democracy and Western influence in the region, along with the international rules-based order.
• The EU is responding to this threat by attempting to strengthen its relationships with Latin American and Caribbean countries.
• The bloc is attempting to build on their affinity for European values and rights, as well their preference for sustainable and inclusive development.
• Cooperation on digital technologies should be a priority in the effort, given the region’s need for greater connectivity.
• The Spanish presidency of the EU should lead the formation of a Digital Alliance with Latin America and the Caribbean at a summit scheduled for 2023.
• The EU can make this alliance work by focusing on connectivity investments, cyber-security, and rights to support Latin American countries’ digital transitions.
• The alliance will also require a long-term vision within the EU, commitments from member states, leadership by several Latin American countries, and public-private investment partnerships.

Introduction

For much of the past decade, the European Union has done little to halt the rise of Chinese and Russian influence in Latin America and the Caribbean. The value of the region’s trade with the EU grew from €185.5 billion in 2008 to €225.4 billion in 2018, but that with China increased tenfold in the same period. Twenty-one countries in the region are now members of China’s Belt and Road Initiative. It was not until 2016 that the EU published a Global Strategy that called for “stronger partnerships” with Latin American and Caribbean countries. Three years later, a Joint Communication argued that the EU’s relationship with the region required an “ambitious and innovative approach beyond the donor-recipient logic and in the spirit of the 2030 Agenda for Sustainable Development”. Nonetheless, that same year, the EU proved unable to ratify its 2019 trade agreement with Mercosur, a grouping that represents 284 million people. And the EU’s 2021-2027 budget included a 14 per cent decrease in funding for Latin America and the Caribbean, as the bloc shifted its attention towards Africa and the Middle East.

The covid-19 pandemic underlined the importance of this effort for Europeans – and of the role that digital technologies could play in it. The crisis made it clearer than ever that the future of Latin American and Caribbean countries hinged on their ability to digitalise their economies. Yet, as China and Russia burnished their reputations in the region through vaccine diplomacy, it seemed that the EU would continue to lose ground to them.

The pandemic also sharpened the EU’s focus on its strategic autonomy, leading it to re-examine its international relationships and interdependencies with a greater emphasis on security vulnerabilities, especially when it came to digital technology. At the same time, the United States’ accelerating campaign to erode China’s global technological power prompted the EU to reassess the risks associated with Chinese investments (particularly in relation to 5G and Huawei). The bloc then imposed severe restrictions on technology exports to Russia in response to the country’s full-scale invasion of Ukraine in February 2022.

All this contributed to European leaders’ recognition of how Latin America and the Caribbean could be central to both geopolitics and the digital transition. The BELLA submarine cable, completed in 2021, now connects Europe to the region – which holds an estimated 40 per cent of the world’s reserves of rare earths and other elements that are vital to the production of advanced technologies, including concentrations of niobium in Brazil, coltan in Colombia, and lithium in Bolivia, Argentina, and Chile.

The EU’s new digital agenda provides it with an opportunity to reinvigorate its relationship with Latin America and the Caribbean by emphasising their shared values, as well as the growing importance of the region’s strategic position, markets, and natural resources. In doing so, the EU can build on the strategic approach to digital technologies it adopted in July 2022, when the Foreign Affairs Council approved several conclusions that require the high representative and the European Commission to make digital diplomacy a core component of EU foreign policy. The council’s decision aligned with the EU’s launch of the Digital Decade to manage the digital transition at home; creation of the Digital Services Act and Digital Markets Act; and establishment of a series of other initiatives to regulate digital investments, data governance, artificial intelligence (AI), cyber-security, and disinformation.

This paper examines the likely content of the EU Digital Alliance with Latin America and the Caribbean, due to launch in 2023. The idea originated at the EU27-Latin America and Caribbean Informal Ministerial Meeting in Berlin on 14 December 2021, when both parties agreed to explore further cooperation in areas such as digital connectivity, the digital divide, data protection, commercial data flows and policy, and regulation. The forthcoming Spanish presidency of the EU can help establish the alliance in the second half of 2023, when it will convene the EU’s first summit with the Community of Latin American and Caribbean States (CELAC) since June 2015. If this initiative is successful, it will extend the EU’s network of digital agreements and cooperation frameworks (which already covers Africa, the Indo-Pacific, and the US) to a region it has otherwise neglected: Latin American and the Caribbean.

Such an alliance would help the EU achieve the goals it set out in its Global Gateway and digital and cyber dialogues, which could have major implications for countries such as Argentina, Brazil, and Mexico. The EU is already planning to spend €3.4 billion for Latin America and the Caribbean under the Global Gateway. And the European Fund for Sustainable Development Plus aims to mobilise up to €135 billion worth of investments in a variety of sectors relevant to the Global Gateway, using a combination of export credit guarantees and private funding. However, as this paper shows, the EU will only be able to implement these plans effectively if it understands the region’s interests in digital technology, the role of its geopolitical rivals there, and what it can offer its partners. The first section of the paper examines the connectivity needs and gaps of the region, together with their approaches to cyber-security threats and digital values and rights. The second section examines the strategies of China and Russia, the EU’s main competitors in the region. Finally, the paper looks at what the EU can offer to the region and how it can it achieve the aims of the Digital Alliance.

A region in need

Around 670 million people live in the 33 countries in Latin America and the Caribbean. While this is approximately 8 per cent of the global population, the region was home to 30 per cent of the world’s fatalities from covid-19. The disproportionate impact of the pandemic was also clear in the economy, which recorded the highest median contraction in GDP per capita in the world. Although the region’s economic growth rebounded to 6.2 per cent in 2021, it is projected to reach just 2.1 per cent this year. Nonetheless, digitalisation was one of the few areas to benefit from the pandemic. For instance, increased connectivity needs led to a 6.8 per cent expansion of access to residential broadband in 2021. The region’s level of digital development is now significantly higher than Africa’s and marginally higher than the Asia-Pacific’s. Still, there is much room for improvement. The 2021 Technology and Innovation Report from the United Nations Conference on Trade and Development classified the region as particularly weak in its readiness to use, adopt, and adapt to frontier technologies, ranking it just above North Africa and sub-Saharan Africa.

Data from the Global System for Mobile Communications (GSMA) shows that, in Latin America and the Caribbean, mobile services and technologies account for 7.1 per cent of GDP, support more than 1.6m jobs, and generate around $29 billion in tax revenue. GSMA Intelligence projects that the number of unique mobile subscribers in the region will rise from 450m today to 485m by 2025, covering 73 per cent of the population. Forty-three per cent of people in the region now have access to residential broadband. Nonetheless, according to the UN Economic Commission for Latin America and the Caribbean, there are huge differences between countries in this. For instance, broadband is an average of six times quicker in Chile and Uruguay than in Paraguay.

There is a huge investment gap in the region’s digital infrastructure. GSMA estimates that operators in the region will invest more than $73 billion in their networks between 2020 and 2025. According to the Centre for the Study of Telecommunications in Latin America, Latin American and Caribbean states will need to increase their investment in digital connectivity by a collective $61 billion (bringing it to a total of $161 billion) between 2019 and 2025 if they are to meet the standards of high-income countries. And, for experts such as Gabriela Ramos and Angel Melguizo, this figure would be the absolute minimum required for the digital transformation of the region’s economies. According to the Inter-American Development Bank (IADB), an investment of $51 billion to establish full 4G coverage of the region would generate a return of $955 billion. Meanwhile, a recent study by the Massachusetts Institute of Technology found that AI could increase the region’s annual economic growth by 1 percentage point by 2035, and could be especially beneficial for Brazil. This need for investment in connectivity creates an opportunity for the EU and other powers.

Connectivity trade-offs

Governments in Latin America and the Caribbean face connectivity challenges in two main areas: regional and social divides, and the deployment of 5G. Poorer people, residents of rural areas, and those who live on the peripheries of urban centres make up a disproportionately large share of the 244 million citizens who are offline. Indeed, the digital divide in Latin America is the largest of any region in the world.

This is closely related to not just the high cost of connectivity investment in rural areas but also the socio-economic status, gender, and age of citizens. While the pandemic accelerated digitalisation in the region, it also widened the social divide by increasing poverty and reducing access to education. Eighty-one per cent of the richest households are connected to the internet, compared to 38 per cent of the poorest households. Sixty-seven per cent of people in urban areas have internet access, but this figure is just 23 per cent for those in rural areas. Almost 50 per cent of people under the age of 26 lack internet access.

While many countries in the region have started to deploy 5G technology, their efforts in the area have been meagre and uneven. Uruguay led the way in 2019, followed by Brazil in 2020. In 2021 Chile became the first Latin American country to hold 5G spectrum auctions. Argentina, Colombia, and Peru are conducting 5G pilot tests and studying how to hold such auctions. Trials and deployments of open radio access networks – or Open RAN, a controversial approach to network interoperability that would allow telecoms operators to choose between components made by various manufacturers, thereby reducing their dependency on any single one of them – are under way in Argentina, Brazil, and Colombia, as operators look to reduce capital expenditure and expand network coverage. However, according to some forecasts, only 86 million Latin Americans will have 5G coverage by 2025, compared to 276 million Europeans and 893 million Chinese citizens. Even these figures may be optimistic, given that Latin American countries are not meeting their 5G deployment schedules.

The high cost of deploying 5G has caused some Latin American governments to doubt the current value of the technology, particularly in countries that lack the advanced digital economy and adequate data regulations to make the most of it. This is why some of them have chosen to complete their 4G networks rather than invest in 5G. In the short term, the more advanced technology would increase productivity for certain parts of the population but would widen the digital divide by largely benefiting wealthier citizens in urban areas.

Nonetheless, the transition to an advanced digital economy is essential to increase growth and generate the tax revenue required to close the digital divide. As the UN Economic Commission for Latin America and the Caribbean observes, connectivity is vital to campaigns to reduce poverty and hunger, improve education, tackle gender and social inequality, create jobs, and combat climate change. More broadly, in the region as a whole, each 10 per cent increase in fixed and mobile broadband penetration results in a 1.6 per cent and 1.7 per cent rise in GDP respectively.

Governments across Latin America are currently launching or trialling rural connectivity programmes. In Peru, Internet para Todos (Internet for All) is establishing partnerships between telecommunications operators, government agencies, international financial institutions, and social media platforms to connect 3.2 million people to the internet in 15,000 municipalities. In Argentina, the REFEFO programme is designed to provide internet connectivity to 258 localities in remote areas with the support of a $100m loan from the IADB. Meanwhile, the new governments in Colombia and Chile have committed to provide an internet connection for all citizens by 2026. These ambitious programmes will require investment and regulatory reform if they are to succeed.

5G security

Like their counterparts in Europe, governments in Latin America and the Caribbean have debated the risks around investments in Chinese technology and connectivity services, including the issue of whether to partially or totally exclude companies such as Huawei and ZTE from their 5G networks. Their doubts stem not least from the 2017 Chinese National Security Law, which compels companies under China’s jurisdiction to transfer data to the government if it is relevant to national security – a particularly acute problem when it comes to submarine cables, fibre-optic networks, and 5G infrastructure. According to the US government, the Chinese authorities can access data on companies, states, or individuals that passes through Chinese telecommunications companies’ infrastructure, including sensitive personal data, intellectual property, and classified information.

Most governments in Latin America and the Caribbean have ignored US requests to exclude Chinese technology, arguing that there is insufficient evidence to support these accusations. Yet several European telecoms companies operating in the region have received subtle indications that they could face US sanctions unless they keep Huawei and ZTE – and sometimes other Chinese companies listed as a national security threat – at arm’s length. At the same time, Chinese diplomats have used private channels and traditional and social media to apply pressure in the other direction, with firms such as Huawei organising various public relations campaigns to burnish their images. These campaigns have included large-scale advertisements involving local celebrities, partnerships with universities and other institutions, donations of equipment to businesses and government agencies, and lobbying by politicians such as former Brazilian president Michel Temer.

Colombia declined to ban Huawei, while Argentina enabled five internet connection points in Buenos Aires that use the firm’s technology. In Brazil, where Huawei is already present in more than half of networks, telecoms firms argue that it would cost consumers billions of dollars to ban the Chinese company. The country delayed its spectrum auctions several times before compromising on a dual network – which excludes Huawei equipment from the communication systems of the government and all federal agencies, but allows the firm to provide more than 242m active mobile connections.

In Mexico, Huawei technology is excluded from the system’s core and areas near the US border. But it is present in other parts of the country – including through the México Conectado project, which the company claims will create the largest public Wi-Fi network in Latin America.

Uruguay, whose government wants to be pioneer in the deployment of 5G, has become a key battleground for this technology. As Uruguay is a frontrunner in digital rights and has one of the strongest democracies in the region, its acceptance of Huawei contracts for 5G deployment could help convince the country’s neighbours to follow suit. But, as President Lacalle Pou puts it, “when we say ‘China’ and they say ‘no’, we say ‘then who?’”. Indeed, the lack of European or US alternatives to Chinese 5G leaves many other governments in the region with no other option.

Cyber-security and the misuse of technology

Most countries in Latin America and the Caribbean are well aware that enhanced connectivity and the digital transition require a resilient cyber-security architecture. In the first half of 2020, during the rapid process of digitalisation prompted by the pandemic, the region recorded the highest rate of cyber-attacks in the world. This trend has only accelerated since then, with the number of attacks rising from 41 billion in 2020 to a staggering 289 billion in 2021.

The sophistication and impact of these attacks are also increasing. And the region has experienced the proliferation of cyber-crimes such as fraud and identity theft using ransomware, phishing, distributed denial-of-service attacks, and adware. For instance, the large-scale ransomware attacks initiated by Russian hacker group Conti in Costa Rica in April 2022 affected 27 ministries, crippling the country’s digital infrastructure, disrupting public healthcare, preventing online tax collection, and leading President Rodrigo Chaves to declare a national emergency. Earlier this year, a cyber-attack on the Chilean Army’s Joint Chiefs of Staff Command involved the theft and publication of more than 400,000 sensitive emails.

Countries in Latin America and the Caribbean are insufficiently prepared to counter such threats. By early 2020, just seven of them had implemented a plan to protect critical infrastructure, ten had established a centralised government body to manage national cyber-security, and 12 had approved a national cyber-security strategy. This is despite the fact that cyber-crime costs the region an estimated $90 billion per year.

The main obstacles to progress in the area include a lack of skilled workers, the use of outmoded IT systems and software, a shortage of financial resources to address vulnerabilities, and the absence of national legal frameworks that adequately cover cyber-crime. Just eight countries in Latin America and the Caribbean have ratified the Budapest Convention. As a multilateral framework for cooperation against cyber-crime, the convention is key to addressing this transnational problem.

Countries in the region also desperately need the tools to fight not only economic cyber-crime but also that involving pornography and paedophilia. Meanwhile, the region is exposed to a host of other online threats to the security and well-being of its citizens and democratic systems, such as abuse, bullying, hate speech, and disinformation.

The “infodemic”, as the World Health Organisation called it, was especially acute in the region due to the weakness of traditional media, combined with the unregulated use of social media platforms. As one UN Development Programme study concluded, much of this flood of online reports promoting supposedly miraculous therapies and spreading distrust of vaccines and the authorities originated in countries outside the region – including Russia and China.

The infodemic has been particularly damaging in its corrosion of citizens’ belief in the integrity of the electoral process. In Colombia, disinformation reportedly contributed to a significant increase in public concern about fraud in presidential elections between 2018 and 2022. In Brazil, fake news on social media platforms helped propagate President Jair Bolsonaro’s unsubstantiated claims that the country’s electronic voting system was vulnerable to fraud. This helps explain why one-third of Bolsonaro’s supporters say they do not trust the electoral system “at all” and just one-quarter that they trust it “a lot”. In a climate increasingly characterised by polarisation and hate speech, the number of incidents of politically motivated violence in the country reportedly increased by 23 per cent between 2020 and 2022.

Rights and values

Countries in Latin America and the Caribbean tend to favour rights-based digitalisation that safeguards democratic principles and values, likely inclining them towards the European model of technological development and regulation. Historically, the region has had a strong humanist culture that emphasises the importance of the rule of law and human rights (even if this has not always been evident in practice). Hence, most countries in the region have implemented or are implementing data protection laws. In some of them, data subjects have a constitutional right to access information on them held by the state.

Many of these data protection laws were inspired by the EU’s 1995 Data Protection Directive and – as in the cases of Chile, Uruguay, and Colombia – will be or have been revamped in response to its 2016 General Data Protection Regulation (GDPR). In countries where data privacy legislation was not in place in 2016, such as Brazil and Ecuador, the GDPR has prompted the creation of new data protection laws. Uruguay and Argentina are two of the 14 countries worldwide to which the EU has granted adequacy decisions, which recognise that their legislation is fully aligned with the GDPR and thereby permit cross-border data transfers with the bloc.

However, states in Latin America and the Caribbean often have markedly different approaches to issues ranging from cross-border data transfers to data breach notifications, including in enforcement. For instance, data protection legislation in countries such as Antigua and Barbuda only applies to individuals’ commercial transactions, while that in nations such as Jamaica has far more in common with the GDPR.

Platform regulation is closely linked to data privacy and protection. Here, again, many countries in the region show an interest in the EU’s attempts to rein in tech platforms to protect their citizens. When WhatsApp announced in January 2021 that users residing outside the EU needed to consent to share their data with Facebook or else lose their accounts, competition and data protection authorities in Brazil, Argentina, and Chile immediately launched investigations into the company. While few states in the region take a comprehensive approach to platform engagement and regulation, local initiatives and anecdotal evidence suggest that they increasingly scrutinise these intermediaries.

Several Latin American states are pioneers in other areas of digital rights. Chile is the first country to discuss legislating on neuro-technologies, including “brain rights” in a draft constitutional reform bill designed to protect mental integrity and well-being from technological manipulation. According to Stanford University’s AI Index Report 2022, Latin America and Europe are both leaders in the development of ethical and responsible AI. Argentina, Brazil, Uruguay, Mexico, Peru, and Chile all have national AI plans, strategies, or guidelines that cover the ethical and regulated use of AI. Brazil, Colombia, Ecuador, and Mexico have signed up to an initiative to implement the Recommendation on the Ethics of Artificial Intelligence created by UNESCO – the first global normative instrument of its kind. Concern over the misuse of AI is also evident at the societal level. For example, activists in São Paulo recently won a civil lawsuit to stop the city’s metro from using AI-enabled facial recognition technology.

Inclusive literacy is another priority for governments in Latin America and the Caribbean – due to the digital divide discussed above. In the region as a whole, a primary school student from a low-income family is six times less likely than one from a high-income family to have access to a computer connected to the internet at home. On average, only 50 per cent of people between the ages of 16 and 65 in Ecuador, Mexico, Chile, and Peru have the skills to conduct basic professional tasks on a computer.

The EU’s main competitors

Russia and China are the EU’s main competitors in Latin America and the Caribbean. China’s remarkable economic rise in the region has translated into a large and growing presence in digital and technology markets. Russia has been far less economically successful in the region but plays an important role in political influence campaigns there, as part of its bid to regain its global standing under the Putin regime.

China’s technological battlegrounds

China is now Latin America’s and the Caribbean’s top trading partner. While the EU’s trade negotiations with Mercosur remain stalled, Beijing estimates that, by 2025, the value of Chinese trade and investment with South America will reach $500 billion and $250 billion respectively. China has become one of the principal providers of physical and digital infrastructure in the region by using instruments such as soft loans and the $30 billion China-LAC Cooperation Fund. Through these efforts, China has developed a deep and wide investment portfolio that covers everything from ports in Peru to nuclear power plants in Argentina, from railways in Bolivia to fibre-optic networks in Chile.

China’s successes in the region follow an ambitious, well-calculated strategy that combines political impulses with economic resources. Since 2012, Chinese President Xi Jinping has visited 11 countries in the region – just one less than Barack Obama did during his eight years in the White House. China has designated Argentina, Brazil, Chile, Ecuador, Mexico, Peru, and Venezuela as comprehensive strategic partners – the highest status of this kind available – and Bolivia and Uruguay as strategic partners. As Xi pointed out in 2017, “Latin America is a natural extension of the 21st Century Maritime Silk Road.”

China’s growing involvement in trade, infrastructure, and connectivity in Latin America and the Caribbean has caused concern in the US. As Admiral Craig Faller, head of the US Southern Command, has acknowledged, “Chinese influence is global, and it is everywhere in this hemisphere, and moving forward in alarming ways.” Some European leaders are also concerned about the rise of Chinese and Russian influence in Latin America – which plays into their growing interest in strategic autonomy following the pandemic and Russia’s full-scale invasion of Ukraine. For example, EU High Representative Josep Borrell has said: “if Europe wants to have influence as a geopolitical actor, it has to pay more attention to Latin America and the Caribbean.”

As discussed, China has a strong interest in digital and technology markets in Latin America and the Caribbean, particularly in Brazil and Chile. Since Beijing launched the Digital Silk Road in 2017, various Chinese companies partially owned by the state have expanded their presence in the region, promising to provide rapid technological development, greater connectivity in rural areas, and many other benefits.

Huawei is the most prominent of these firms in digital infrastructure. Its significant investments in Latin America and the Caribbean in the last 15 years have led it to operate in 20 countries, accounting for more than 20 per cent of the telecoms equipment market in at least four of them. It is the leading 5G network provider in the region – as is particularly apparent in Chile, Peru, and Brazil – and has been involved in 10 of the 30 5G tests of this technology conducted in Latin American countries.The company has invested in areas such as cloud computing, the digital transition, solar power systems, and technological training.

China has also set its eyes on submarine cables, fintech, e-commerce, and news aggregation apps. The country has capitalised on the fact that Latin American states will need to build an estimated 30 submarine cables in the next decade to meet their connectivity demands. It has funded the construction of the South Atlantic Inter Link – a project to connect Brazil to Africa supported by China Unicom, Huawei, and Cameroonian firm Camtel – and is planning a cable that will run between South America and Asia. Chinese firms’ involvement in fintech in the region includes Tencent’s $180m investment in Brazil’s Nubank, AliPay’s partnership with Mexican digital payment platform Openpay, and the use of Huawei equipment in core components of Brazilian state-owned bank Caixa. In Mexico, Alibaba is trying to gain a foothold in the e-commerce sector, while Shenzhen-based news aggregator Noticias Águila has gained more than 20 million active users.

At the same time, China has entered the Latin American digital security sector through sales of surveillance systems, which it promotes under Huawei’s Safe Cities programme. Countries such as Mexico and Ecuador have turned to cost-effective Chinese equipment and software to update their ageing security infrastructure and, in some cases, support the fight against corruption. Huawei and other companies have developed these capabilities in a domestic environment characterised by minimal privacy concerns, using technologies such as facial recognition and biometrics in combination with big data. This adds to widespread concern about the likely export of digital authoritarianism to Latin America.

These trends look set to continue. In 2021 China and CELAC member states signed an ambitious strategy document for economic and trade cooperation during 2022-2024. The agreement is designed to promote dialogue in areas such as norms and rules in cyberspace, as well as the misuse of information and communications technology (ICT), and to strengthen cooperation in digital infrastructure, telecommunications equipment, 5G, big data, cloud computing, AI, the internet of things, smart cities, Internet Plus, and universal telecommunication services.

China has two main motives for pursuing these agreements and initiatives. The first is commercial, as they have the potential to produce a good return on investment and to boost the global position of Chinese tech giants. This is important for Beijing at a time when the US and its allies are targeting Chinese firms over their involvement in the repression of dissidents in Hong Kong, Uighurs in Xinxiang, and the Chinese people in general. Moreover, these firms can exploit relatively weak data protection legislation in Latin America and the Caribbean to harvest information that is valuable in the development of AI-based products and services.

The second motive is strategic. Investments of this kind enhance China’s diplomatic power and give it greater room for manoeuvre on key foreign policy issues. Companies such as Meya Pico – which has provided services to the government in Argentina, and whose software allows security forces to extract data from users’ mobile phones – could help Beijing silence critics and spread propaganda abroad. At the same time, China’s attempts to reduce its reliance on the West and create an alternative multilateral order benefit from access to markets and raw materials in Latin America and the Caribbean, as well as the adoption of Chinese technological standards in these markets. The latter, in turn, helps Beijing push for the use of Chinese technological standards – which are different from those of the US and the EU – in other regions.

This helps explain why, for instance, Chinalco is attempting to develop Venezuelan nickel and Chilean and Peruvian copper resources, while Xinjiang TBEA has secured a major stake in Bolivia’s lithium extraction facilities. In all, China is trying to draw the region onto its side of what UN Secretary-General António Guterres warns could become a divide between two spheres of influence, each with its own currency, trade and financial rules, cyber capabilities, and dominant geopolitical and military strategies.

Accordingly, Beijing has sought to persuade several Latin American and Caribbean states to withdraw their diplomatic recognition of Taiwan (eight of the 14 countries that still recognise Taiwan are in Latin America and the Caribbean). So far, this effort has succeeded in Costa Rica, the Dominican Republic, El Salvador, Nicaragua, and Panama. Beijing has also appealed to governments in the region to help mitigate criticism of its behaviour within UN bodies.

As Freedom House argues, China’s initiatives to influence media outlets and public opinion in Latin America have led to a smear campaign targeting dissidents in Argentina, the intimidation of journalists in Brazil, and the suppression of news stories in Peru. These initiatives have allegedly involved both public diplomacy and methods that are “covert, coercive, and potentially corrupt”. For example, the Chinese government used its networks of influence in Latin America to try to repair the reputational damage caused by its initial mistakes in handling the pandemic. To this end, it adopted friendly methods such as the promotion of manifestos of support for China (which were signed by more than 40 political parties and organisations in the region) and aggressive ones such as the use of social media to attack its critics.

Russia: The low-cost spoiler 

Russia’s comeback in the region peaked in 2014, when it concluded several security and economic agreements with Cuba, Argentina, Brazil, and Nicaragua. Soon after, Moscow launched the Spanish version of RT (formerly Russia Today), which then opened bureaus in Buenos Aires, Caracas, Havana, Los Angeles, Madrid, Managua, and Miami.

Like China, Russia sees Latin America and the Caribbean as a region in which it can advance its global interests, including through efforts to avoid criticism at the UN and to establish an alternative international order. Latin American and Caribbean countries also provide goods for the Russian market, especially foodstuffs, as Moscow works to reduce the impact of Western sanctions on Russia. The Kremlin supports its authoritarian allies in the region such as Cuba, Venezuela, and Nicaragua, while working to weaken democracies there by encouraging polarisation, exploiting social divisions, and sowing distrust in institutions.

In contrast to China, Russia has no major economic role in Latin America and the Caribbean. Instead, it adopts influence strategies that are inexpensive but allow it to act as a spoiler. 

This approach is particularly evident in the realms of public opinion and communications. Since February 2022, Russia has been highly active across the region in disseminating narratives to undermine Western support for Ukraine. One of its favourite narratives is that problems with global food supplies and inflationary pressure linked to high energy prices result from Western sanctions rather than the Russian invasion.

In this, Moscow has relied on a network of TV stations (RT) and news agencies (Sputnik) that produce content in Spanish for Latin America. Across ten countries in the region, RT reaches 18 million people per week, has more than one billion views on YouTube, and has 16 million followers on Facebook – nearly triple the number of its English-language site. RT chief Margarita Simonyan has stated that Russia needs her organisation for the same reasons it needs a defence ministry. As she describes it, the goal of these interventions is to “create and captivate audiences, which can then be used in critical moments” to defend Russian interests. Indeed, visits to RT’s Spanish site spiked to 28.4m in January 2022 and 30.9m the following month, compared to a monthly average of 21.5m in November and December 2021.

Local online media outlets, social media platforms, and messaging apps often become conduits for Russian narratives. Although Latin America and the Caribbean are home to a wide array of media outlets, RT in Spanish is the third-most shared site on Twitter for Spanish-language information about Russia’s invasion. Concerned about the impact of this on both locals and Spanish speakers in the US, a bipartisan group of US senators have demanded that Facebook, Twitter, and even TikTok, the Chinese-owned app, carry out checks on Russian-origin posts in Spanish.

Still, most Russian (and Venezuelan) disinformation activity in the region focuses on destabilising democracies, shaping public opinion, and sowing discord through the methods discussed above. In 2019 the Kremlin’s networks used this approach to intensify protests in Ecuador, Peru, Bolivia, Colombia, and Chile. According to one study commissioned by the US State Department, in one 30-day period, Russian-linked accounts posted strikingly similar messages in countries across the region within 90 minutes of one another. Similarly, Mexico’s National Electoral Institute concludes that 65 per cent of visits to the country’s website for overseas voters come from computers located in St Petersburg.

Colombia has also become a target. Its national voter registry experienced around 50,000 cyber-attacks attributed to Russia and Venezuela during the country’s 2022 legislative elections. Three years earlier, then vice-president Marta Ramírez claimed to have evidence showing that Venezuelan and Russian platforms had created and amplified anti-government messages on social media, attributing 10 per cent of tweets in support of anti-government protests to Russian-linked accounts.

The EU’s offer to the region

The EU may have lost a great deal of ground to China and Russia, but it still has a chance to become a relevant technological player in Latin America and the Caribbean: a poll conducted in ten countries across the region in July 2021 found that only 17 per cent and 19 per cent of respondents had a favourable view of Russia and China respectively, while 43 per cent had a favourable view of Germany (the only European country included in the survey). Importantly, respondents identified the EU as a global leader in the defence of human rights (58 per cent), fighting poverty and inequality (52 per cent), and promoting peace (56 per cent). However, while respondents considered the EU the best partner in efforts to address climate change, just 5 per cent of them saw the bloc as a technological power and 46 per cent of them saw China as the best trade and investment partner – with 76 per cent identifying the country as the global leader in technology.

Still, as discussed, Chinese assistance may be economically attractive, but most countries in the region want to reform their education, health, and public administration services in line with European rather than Chinese goals – and to follow social inclusion and environmental policies more aligned with Europe than with China. The EU is already a leading investor in renewable energy in the region, positioning it to make further investments in this and other areas, such as technology.

The bloc also has an advantage in that it can help Latin American and Caribbean countries address some of the challenges they face as a result of the US-China rivalry. For example, US pressure recently forced Chile to cancel a public tender to process passports with Chinese company Aisino, leaving Santiago in an uncomfortable position vis-à-vis both Washington and Beijing. More broadly, the EU’s regulations on 5G could help countries in the region adopt the technology according to rules and standards rather than just the exercise of geopolitical power. 

If the EU is to become a relevant technological player in Latin America and the Caribbean, it will need to make a competitive offer to countries there based on three pillars: markets, security, and rights. The bloc will also need to combine its investments in connectivity with an effort to align regulations and standards.

Connectivity

To sate the region’s hunger for connectivity investment, the EU will require a substantial allocation of resources (including public and private financial support), commitments to effective and stable regulation, and long-term bipartisan agreements that provide legal security.

To close the connectivity gap between urban and rural areas, it will be necessary for telecommunications firms and these governments to compromise on the roll-outs of 5G and 4G. Excessively high spectrum prices, poorly designed auctions, and uncompetitive or badly regulated markets could provide governments with much-needed revenue in the short term but prevent firms from investing in rural networks or offering citizens connection packages at affordable prices.

Governments in Latin America and the Caribbean will need to enact regulatory and fiscal reforms if they are to provide incentives for private investment. The International Telecommunication Union (ITU) found in its 2019 Regulatory Tracker Index that just eight countries in the region had regulatory frameworks that met fourth-generation standards (in contrast, those of all EU member states met these standards). Latin American and Caribbean governments also need to introduce investment tax incentives and increase access to training in digital skills.

Therefore, the EU should offer regulatory support and public guarantees for private investments through the Global Gateway, the European Investment Bank, member states’ public banks, export credit agencies, and international financial institutions.

The EU would need to coordinate this initiative with the US and the G7, which in its June 2022 meeting pledged to raise $600 billion for a global connectivity fund. The mechanism will include $200 billion from the US Partnership for Global Infrastructure, along with contributions to the Global Gateway from Canada, Japan, and the United Kingdom.

The undertaking is designed to counter the Belt and Road Initiative (even if the G7 did not explicitly state this). As European Commission President Ursula von der Leyen argues, the aim is to present a “positive, powerful investment impulse to the world to show our partners in the developing world that they have a choice”. Similarly, the EU and the US vowed at the May 2022 Trade and Technology Council ministerial meeting to establish a task force for cooperation on secure digital infrastructure investments in third countries. In this context, the EU should prioritise coordination with the US on financing for ICT projects in Latin America and the Caribbean, given the region’s proximity and political importance to the country.

One problem with such pledges is that states often fulfil them only partially or in ways that reduce their impact. There is a risk that the middle-income status of many countries in Latin America and the Caribbean will prevent them from qualifying for these funds, thereby opening the door to Chinese bids. Therefore, it is crucial for the EU to identify high-impact flagship projects in 5G and rural connectivity that can quickly raise its profile in Latin America and the Caribbean.

On 5G deployment, countries such as Uruguay, Colombia, and Chile could act as entry points for the EU to combine viable public-private investments with its regulations, such as those that address security concerns and high-risk vendors. In doing so, the bloc should pay close attention to the idiosyncratic connectivity needs and challenges of Caribbean countries.

Social inclusion is a key topic in a region that suffers from deep inequalities. Assistance to close the digital gap and improve citizens’ ICT skills is another entry point for the EU. On rural connectivity, the bloc should use Global Gateway funds to support and replicate existing programmes to bridge the gap.

Cyber-security

The region needs massive investment in cyber-security to address the vulnerabilities of individual citizens, firms, and governments, especially in relation to critical infrastructure. Therefore, the EU should create or support strategies that help governments in the region to tackle cyber-security risks. This would be an important step towards protecting citizens – as well as firms and public institutions – from economically motivated cyber-crimes, such as those that involve scams, phishing, or ransomware.

Countries in the region that condemned Russia’s invasion of Ukraine at the UN have experienced a series of ransomware attacks involving Russian or Russian-affiliated actors. The sheer size of the attacks on Costa Rica, Peru, Mexico, Ecuador, Brazil, and Argentina could help governments in the region recognise the threat from both Russia and its strategic partner, China.

The EU began to make itself a more attractive partner in this area on 22 May, when it opened its first cyber competence training centre in the region in Santo Domingo. The institution is set to become an independent multinational organisation by 2025. The EU approach, based on regulatory convergence, public-private partnership, and independent agencies could provide a valid example to be followed by other actors in the region. The bloc could open the way for structured cooperation by drawing on its wealth of experience with the Network and Information Security directives; its toolbox for dealing with high-risk 5G vendors; investment screening; export controls; supply chain security; and measures such as the 2022 Code of Practice on Disinformation, the Digital Services Act, and the Digital Markets Act.

The EU should also link cyber-threats to national security and strategic autonomy. Given that many cyber-attacks are orchestrated by states or state-affiliated actors, it will be important for the bloc to help countries in the region build deterrence and offensive capabilities, along with diplomatic measures and sanctions packages, in the area – with a focus on investment screening, supply chain security, and the protection of critical infrastructure (including that for elections and political institutions that could be compromised by foreign influence and disinformation). The EU’s existing cyber-diplomacy toolbox to deter and respond to malicious cyber activities could serve as a starting point for discussions about cyber-security investments with states in the region.

Democracy and digital rights

Issues related to democracy, rights, and individual freedoms should be at the forefront of the EU-LAC Digital Alliance. The EU is currently discussing its own declaration of digital rights, in line with Spain’s Charter of Digital Rights – which has already had a big impact on Latin American countries. Like the US, the EU was one of the leading forces behind the Declaration for the Future of the Internet, which received a positive reception in countries such as Argentina, Colombia, Peru, and Uruguay.

It will be essential for the EU to work with governments in Latin America and the Caribbean on ethical standards, especially in data privacy and management, as well as AI. Given that Argentina and Uruguay are the only countries in the region to have received adequacy decisions from the EU, many others are missing the opportunity to gain access to data and e-services that could accelerate their digital transitions. The EU should change that by building on structures and initiatives such as the network of Ibero-American data protection agencies and the UNESCO-led process to achieve regulatory convergence on both data privacy and ethical AI.

Democratic institutions in the EU, Latin America, and the Caribbean face a common threat from disinformation and foreign interference – as is especially apparent in relation to electoral processes and bodies. The EU’s election observation missions should regularly focus on online disinformation as a key element of their work, while the bloc should offer training on disinformation to other bodies that supervise elections. The EU should allocate more resources to the East Stratcom Task Force, the unit of the European External Action Service that deals with disinformation, with the aim of countering foreign narratives that undermine the EU’s foreign policy and legitimacy at home and in the global south. The unit could more effectively identify and combat hybrid threats in the information space by setting up a counter-disinformation capacity-building programme. This would help governments and civil society groups in the region address the problem, especially in relation to disinformation originating from external state actors during electoral campaigns.

Another common threat is the online coercion of the most vulnerable groups in society (such as women and members of ethnic minorities). The EU’s experience of interacting with companies would be useful in efforts to address this threat. The bloc could engage in cooperation to strengthen political institutions and civil society in the region by supporting independent research and groups that specialise in online rights.

The EU should also draw on its Democracy Action Plan, part of which deals with the protection of independent journalists, as well as copyright regulations to help sustain free and independent journalism, and to empower civil society in the area. The effort should draw on the bloc’s regulatory standards in remote, AI-based facial recognition and the security of biometric and personal data held by government agencies. This would help address widespread concerns about Chinese firms’ involvement in the security sectors of Latin American and Caribbean countries, some of whose governments are tempted to use these tools to enhance surveillance of their citizens.

If European policymakers are to successfully establish the EU-LAC Digital Alliance, they will need to understand not only their interests but also the region’s requirements. As this paper has shown, the best entry points for the EU are in three main areas. Firstly, the bloc should create a connectivity plan based on financial resources and regulatory commitments that will guarantee sufficient investment in both 5G and rural connectivity. Secondly, the EU should enhance cyber-security in the region to benefit citizens, public bodies, the private sector, and political institutions and processes. Thirdly, the EU should forge a digital rights pact that covers not just convergence on privacy, data flows, and ethical AI but, just as importantly, improvements in digital skills, training, and social inclusion.

Conclusion: The return of the EU

The EU needs to undergo a radical shift if it is to end its neglect of Latin America and the Caribbean. It should do so out of not just solidarity with the region but also enlightened self-interest: as the activities of China and Russia suggest, the EU needs to establish a strong presence in the region to strengthen its strategic autonomy and accelerate its green and digital transitions. In doing so, the bloc should pay close attention to the following issues:

• EU political leadership.Many member states are still unaware of the region’s strategic importance to the EU. Therefore, the launch of the EU-LAC Digital Alliance will require decisive action by the top leadership of the EU and its member states, including the president of the European Commission. With digital competencies scattered across different commissioners and directorates-general, the high representative’s dual role in the Council and the Commission is essential to the creation of a comprehensive strategy involving diplomatic, economic, and security instruments. If the EU’s connectivity investment packages are to challenge China’s dominance of the region, they will require the support of member states – particularly their finance and economics ministries, along with their public banks, export credit institutions, and development agencies.

• Latin America and the Caribbean for all. Traditionally, many member states have seen the region as primarily a concern for countries with historical and economic ties to it, such as Spain, Portugal, France, and Germany. In doing so, they have missed how important the region has become to both China and Russia. The EU’s relations with Latin America and the Caribbean are now of huge geopolitical significance. While member states are likely to continue prioritising Africa, the Middle East, the Caucasus, or the Indo-Pacific, they should match the strategic importance that China and Russia ascribe to Latin America and the Caribbean. The “no limits” partnership Beijing and Moscow formalised on 4 February 2022 should act as a wake-up call for all EU member states, especially northern and central ones, on Latin America and the Caribbean. They need to understand that their security and values are at stake in the region. As the recent and hugely important vote on the leadership of the ITU showed, Latin American and Caribbean votes can be crucial to sustain multilateral institutions and shield them from combined Chinese and Russian pressure. Russia’s ultimately unsuccessful candidate, Rashid Ismailov, had pledged to fight American “dominance” online and complained about the “demonization” of Huawei.

• A new vision. It is essential to upgrade the 2019 Joint Communication to account for the geopolitical changes that have affected the region and Europe in the last three years. The document should include a new vision that has digital technologies and the geopolitics of technology at its core. The key goals of this exercise should be to reverse the decline in EU budget allocations to the region and to ensure that Latin American and Caribbean countries with severe connectivity needs and digital divides can receive funding from the Global Gateway (despite their middle-income status). EU institutions and member states should draft a strategy and an action plan for 2023-2028 that they will formalise at the EU-LAC Summit next year. That strategy should include a toolbox containing the instruments they need to support the EU-LAC Digital Alliance.

• A key role for Spain. Spain’s ties to the region and upcoming presidency of the EU mean that it should play a major part in this process. But its most important contributions would be to engage with reluctant EU member states, support EU institutions with its expertise on the region, and ensure that the bloc allocated sufficient resources to the task.

• Leadership from EU foreign ministers. The informal meeting between EU, Latin American, and Caribbean foreign ministers in Buenos Aires on 28 October provides an opportunity to start the process. They should ask their cyber-ambassadors to begin working with presidents’ cabinets and ICT ministers on these agendas, to prepare digital policy ideas for the 2023 EU-CELAC Summit. They should also develop strategic alliances with like-minded countries in the region to accelerate the process. And they should contribute to efforts to improve coordination and cooperation between the European Commission and the European External Action Service.

• Multilateral institutions and processes. Due to the economic and geopolitical diversity of countries in Latin America and the Caribbean, one cannot expect them to speak with one voice. To help reconcile their differences, the EU will need to coordinate work on various parts of its agenda with multilateral institutions such as the World Bank and the ITU. For instance, where necessary, it will be crucial to bring Latin America and Caribbean countries into the global struggle to establish open and ethical technological standards. Similarly, these countries have a strong interest in many of the issues discussed by the EU-US Trade and Technology Council. The idea is not to formally integrate Latin America and Caribbean countries into such organisations but to facilitate policy and regulatory convergence through existing institutions – partly by promoting best practices and launching joint projects. Convergence through legislation that does not require international treaties could be especially effective for regulations covering markets, taxation, and tech platforms.

• Strategic partnerships. The EU will also need to work directly with individual countries, especially those it sees as strategically important and aligned with EU values and interests. To help build political momentum, members of the Digital EU Ambassadors network should start travelling to the region with their colleagues in the European External Action Service to establish closer contacts with their counterparts there, while encouraging Latin American and Caribbean foreign ministries to set up their own networks of this kind.

• Public-private partnerships. An additional benefit of closer digital ties to Latin America and the Caribbean comes from the business opportunities it could provide to EU member states – which will be largely determined by the nature of their technological capabilities rather than other factors. The region’s digital investment needs are too extensive for member states to compete against one another to dominate its markets. Public-private partnerships involving both sides of the Atlantic will be required to meet these needs. Therefore, the EU should set up a business forum that runs in parallel to the summit, just as the B20 does with the G20. This would help turn rhetoric into action by identifying and funding flagship projects with which to kickstart the Digital Alliance. Similarly, a civil society forum should also run in parallel to the summit, providing an opportunity for digital rights activists and experts, as well as independent media outlets and associations, to have a say in the process.

• Implementation. As with every alliance, the key challenge will be in the implementation of the underlying strategy. This will require a greater allocation of resources to units of the European Commission and the European External Action Service that deal with external digital policy, which currently lack the staff, capabilities, training, and financing they need to manage the alliance. Only then will they be able to take the lead, capitalise on strategic opportunities, drive the public debate, create new initiatives, and meet the demands of governments in Latin America and the Caribbean. Once they have the resources they require, they should begin by reinvigorating the EU’s negotiations on GDPR adequacy decisions with countries in the region.

Acknowledgments

The authors would like to thank the interviewees for this paper, whose insights made a great contribution to it. They include Miguel Ariza, Mario Castillo, Francisco Ceresuela, Belisario Contreras, Nacho Gaitán, Vladimir Garay, Natalia Guerra, José Juan Haro, Valerie Jordan, Angel Melguizo, Félix Miranda, Víctor Manuel Muñoz Rodríguez, Santiago Pinzón, Kenneth Pugh, Virginia Reginato, Nelson Remolina, Cristina Rodríguez Corzo, Erika Rodríguez Pinzón, Carlos Santiso, Arlene Beth Tickner, Sandra Urrutia, Cristina Vélez, Andrés Villar, and Alberto Yohai.

The authors would also like to thank the participants in workshops held on 27 June and 27 July 2022, who include officials from the Spanish government, EU institutions, and several multilateral organisations; industry representatives; members of business associations; and experts from Europe, Latin America, and the Caribbean. While there are too many participants to name here, each of them provided valuable input. The authors are also grateful to the Hermes Institute for its support.

The research for this paper included two field missions to Chile and Colombia, as well as a series of interviews with the heads of EU delegations in Chile, Uruguay, Colombia, Mexico, Argentina, and Brazil. The authors would like to thank the Spanish embassies and EU delegations in Santiago and Bogotá for their support and their facilitation of interviews, as well as the Telefónica teams in Colombia, Chile, and Spain.

This paper was made possible by the generous support of the State Secretariat for the European Union of the Spanish Ministry of Foreign Affairs, European Union, and Cooperation (via the Hablamos de Europa programme).

Finally, a special thank you goes to Julian Ringhof for his helpful comments on earlier drafts of the paper and to Astrid Portero, who is a marvellous research assistant.

About the authors

José Ignacio Torreblanca is a senior policy fellow and head of ECFR’s Madrid office, and a professor of political science at Universidad Nacional de Educación a Distancia. His publications on technology and geopolitics include: ‘The geopolitics of technology: How the EU can become a global player’ (ECFR, May 2022), co-authored by Julian Ringhof; ‘The US-EU Trade and Technology Council: State of play, issues and challenges’ (Esade EcPol, January 2022), co-authored by Raquel Jorge; The Power Atlas: Seven battlegrounds of a networked world (ECFR, December 2021), edited by Mark Leonard; ‘Geo-tech politics: Why technology shapes European power (ECFR, July 2021), co-authored by Ulrike Franke; ‘Democracy, platforms and foreign agents’ in‘Europe’s digital sovereignty: From rule-maker to regulatory superpower in the age of US-China Rivalry’ (ECFR, July 2020), edited by Carla Hobbs; and ‘The geoeconomics of the digital’, co-authored by Andrew Puddephatt and Carla Hobbs, in Connectivity Wars: Why migration, finance and trade are the geo-economic battlegrounds of the future (ECFR January 2016), edited by Mark Leonard.

Torreblanca is a member of the editorial board of the online journal on global politics esglobal, the journal Política Exterior, and the journal Ethic, as well as a member of the Scientific Council of Real Instituto Elcano, the board of trustees of the Fundación Felipe González, and the Barcelona Institute for International Relations. He is also a member of the advisory board, and director of the Scientific Committee, of the Hermes Institute, which is dedicated to the promotion of digital rights. Torreblanca holds a PhD in political science from the Complutense University of Madrid.

Carla Hobbs is the programme manager of ECFR’s Madrid office and of the tech initiative within the European Power programme of the European Council on Foreign Relations. Prior to joining ECFR in 2018, Hobbs worked at the European External Action Service as a political officer in the delegation of the European Union to Chile and previously as a junior professional in the EU delegation to Trinidad and Tobago. Between 2014 and 2016, she was a research assistant at ECFR’s Madrid office, directly supporting the head of the office, José Ignacio Torreblanca.

Hobbs holds a Joint BA/MA degree in History from the University of Edinburgh and an MA in international journalism from City University London. Hobbs co-edited with Torreblanca Europe’s Digital Sovereignty: From rulemaker to superpower in the age of US-China rivalry (ECFR, 2020). She also co-authored the chapter ‘The geoeconomics of the digital’ with Andrew Puddephatt and Torreblanca in Connectivity Wars: Why migration, finance and trade are the geo-economic battlegrounds of the future (ECFR, 2016), edited by Mark Leonard.