The Ties Between Countries In Latin America

Latin America hosts intricate geopolitical relationships between its nations. Although part of the same group, Latin American countries have different cultures, economies, and political systems, and in many cases, different relationships with other countries both outside and within the region.

Over the last century, the territory as a whole experienced turmoil, from poverty to authoritarian regimes, but it also saw rapid growth and change. Despite all that shared history, there are still disparities. After all, the physical distance between Venezuela and Uruguay is larger than the one between Germany and Nigeria.

This variety of experiences impacts countries differently across the area and creates opportunities and challenges that influence their social, economic, and political dimensions today. In this article, we lay out a brief overview of the current ties between countries in Latin America, taking the first step into understanding the complex net of relationships within LATAM.

The History of Ties Between LATAM Countries

Over the course of history in the Americas, social ties between countries have been shaped by a mix of cultural influences, economic movements, and politics. The strenuous process of colonization left a legacy in the region that set up hierarchical structures, which stayed in place even after the multiple independence movements that happened over the 19th century.

Because the histories of revolution and decolonization of the countries we know today are so deeply intertwined (and very different from how things happened in North America), understanding that there is overlap in the emergence of these nations is crucial to comprehending how they interact today.

For example, the single territory of the former country known as Great Colombia in the late 1810s gradually gave origin to Ecuador, Venezuela, and Colombia by 1830. Between the mid and late 1800s, Argentina and Chile almost doubled in size, while Paraguay was almost completely annexed (70%) after suffering through a war against Brazil, Argentina, and Uruguay. The country then went on to engulf a small part of Bolivia’s territory after another war in the 1930s.

Despite the previous examples, since its independence, the region has been largely free of destructive conflicts between its nations, at least when compared to areas like Europe. The continent, both internally and globally, is seen as a community that, as a unity, stands above the individual nation-states (Caetano, 2002), and the republics that compose it tend to consider themselves as sister republics.

The social differences found in Latin America are closely tied to the previously mentioned onset hierarchy and a legacy of colonization. The gulf between social and ethnic groups within countries is, and has historically been, greater than the differences between these groups across country borders. (Caetano, 2002).

Even so, post-independence, there were periods of political unrest and divergent ideologies, especially across the 20th century. Economic and social gaps persist, leading to migration and other challenges. Despite these, Latin American nations work on internal alliances through economic blocs to address common concerns and push each other forward.

Current Political and Economical Collaborations

Mercosur/Mercosul:

Starting from the southern end of the Americas, Mercosur (or Mercosul, in Portuguese), whose name is an abbreviation of “common market of the South,” functions as a political and economic bloc with roots forming in 1977, born from agreements between Brazil and Argentina while both were still under military regimes.

Currently, it’s comprised of Argentina, Brazil, Paraguay, Uruguay, and most recently, Bolivia, an addition formally announced in 2023 after an eight-year-long process. Mercosur plays a crucial role in regional integration, and its objectives are to offer the free circulation of goods, services, capital, and labor, the coordination of economic policies between its countries, the creation of a customs union, and the establishment of a common external tariff (a common tariff on imports of goods from countries outside the bloc).

Trade within Mercosur reached approximately $41 billion USD in 2021, emphasizing the economic importance of this alliance. Beyond just the economic impacts, this political alliance helps its member countries in other ways. Citizens of Mercosur are granted special rights within the bloc, and they can transit more easily within the alliance (e.g., not needing a passport to travel by air to other member countries) and have easier access to residency, work, and social services in other countries from the bloc.

Pacific Alliance:

On the western portion of the continent lies the Pacific Alliance, formed in 2011 by Chile, Colombia, Mexico, and Peru. This economic integration works in a similar way to Mercosur when it comes to its economic objectives and aims to foster trade and investment among member countries, promoting joint efforts for development.

According to the Pacific Alliance website, intra-alliance exports increased by 60% between 2011 and 2019, reflecting the positive impact of this regional partnership on the economy. While Mercosur focuses on regional development and economic integration, the Alliance puts an emphasis on a trade liberalization approach, looking to promote competitiveness and innovation, and it doesn’t focus on social and political ties when compared to the Southern bloc.

Both alliances have their own individual ties with external groups like the European Union and work independently to negotiate political and economic agreements with them. The Pacific Alliance and the EU have an established relationship and a number of shared interests, including trade, investment, and sustainable development.

The Pacific Alliance is also a member of the CELAC (Community of Latin American and Caribbean States), which has a formal dialogue put in place with the EU. Mercosur and the EU have an even longer history of cooperation, but their relationships aren’t as solidified as the Pacific

Alliance and EU ties. Regardless, both groups have established an FTA (Free Trade Agreement) with the EU. Some institutions believe that commercial ties between the EU and Mercosur could open up $100 billion USD worth of market opportunities.

It’s worth mentioning that a year after the creation of the Pacific Alliance, Mexico joined the MNT-FTA (Mexico-Northern Triangle Free Trade Agreement), another alliance years in the making, to foster economic cooperation between Mexico and the Northern Triangle countries (El Salvador, Guatemala, and Honduras). This agreement increased trade and job opportunities and contributed to regional development.

A Quick Note on the Ongoing Venezuelan Crisis

Venezuelan Crisis and Migration:

The current political crisis in Venezuela has strained relationships within the region. The divergence in political stances from other countries in regard to the Venezuelan government has created a complex diplomatic scenario, leading to increased migration from the area, economic disruptions, and challenges in regional cooperation.

According to the United Nations High Commissioner for Refugees (UNHCR), Colombia is currently the country with the most Venezuelan refugees in the world, hosting about 1.9 million Venezuelans. This is a reverse process to what happened between the 1960s and 1970s, when 5% of the Colombian population migrated to Venezuela, seeking the good economic prospects the country offered at the time.

Conclusion

The geopolitical relationships between countries in Latin America are complex and go back centuries. Contemporary examples such as the Pacific Alliance and Mercosur showcase successful regional initiatives that serve slightly different objectives but ultimately drive regional integration and economic growth.

At the same time, challenges like social unrest highlight the elaborate political relationships of the region. As businesses engage with this dynamic reality, understanding these trade agreements and the dynamics behind them is imperative.