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In search of business, Europe changes tone in Latin America

Mexico's President Enrique Pena Nieto (L) shakes hands with Germany's Chancellor Angela Merkel during a private meeting at summit of the Com
Mexico's President Enrique Pena Nieto (L) shakes hands with Germany's Chancellor Angela Merkel during a private meeting at summit of the Com

By Robin Emmott

SANTIAGO (Reuters) - Five years ago during the closing speeches of a summit in Chile, Spain's king told Venezuelan President Hugo Chavez to "shut up" in an exchange that epitomized the fruitless meetings between Europe and Latin America at the time.

Dominated by leftist rhetoric and instability in the Andes, the summits were sideshows to the rapid economic growth in Europe that followed the introduction of the euro a decade ago, and the concerns of Madrid and Brussels lay elsewhere.

But a debt crisis in Europe has turned the relationship between former imperial powers and their colonies on its head. EU leaders meeting in Santiago for a summit with Latin American heads of state this weekend were frank about their eagerness to piggy-back onto the region's impressive economic growth.

"This is now a strategic relationship between equal partners," said German Chancellor Angela Merkel, leading a huge delegation of European Union leaders and business executives.

With so many bilateral meetings during the two-day summit, Merkel had barely finished delivering her remarks before she rushed off to Santiago's business district to try to arrange investments and seal trade deals.

"We invite you to invest in Germany," she said, echoing Spanish premier Mariano Rajoy, who the day before made his plea from Chile's presidential palace.

With 60 percent of young Spaniards unemployed, and the German economy, Europe's biggest, struggling with the impact of a public debt crisis that nearly broke up the euro zone last year, Latin America clearly has the upper hand.

Latin America's economic output is expected to grow almost 4 percent this year, while the 17-nation euro zone will probably contract. Europe wants Latin American companies to follow Mexican businessman Carlos Slim, who has invested in Dutch telecoms company KPN.

European governments also want to ensure their companies win big infrastructure contracts for ports, highways and airports in Latin America, including those for the 2014 World Cup and 2016 Olympics in Brazil.

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'NEVER BEEN BETTER'

Diplomats at the Santiago summit spoke of a new, relaxed mood among the more than 60 countries represented, helped by a big dose of humility from the Europeans.

"Latin America likes the idea that the European Union has problems too," said one EU diplomat who worked closely with Chilean colleagues during the summit.

Clearly anxious to get the message across, two of the European Union's most senior officials, Herman Van Rompuy and Jose Manuel Barroso, gave five speeches each in less than two days, vaunting Latin America's successes and speaking of the "intertwined destinies" of the two regions.

That went down well with leaders such as Argentine President Cristina Fernandez, who praised Europe's change of tone: "The Europeans have finally realized ... we need a relationship where both sides win."

While the threat of a euro zone break-up was overcome last year, EU leaders in Santiago addressed questions about the future of the wider, 27-nation European Union after British Prime Minister David Cameron announced plans last week to hold a referendum on British membership if he wins re-election.

Meanwhile, summit host Chilean President Sebastian Pinera and his Colombian counterpart Juan Manuel Santos appeared to revel in the turnaround in a continent once synonymous with hyperinflation, dictatorships and guerrilla violence.

"We've never been so well off," Santos said, trumpeting his pro-business drive that has experienced soaring foreign investment and a 30-month run of falling unemployment in Colombia. "Every one of our citizens coming out of poverty is a potential new consumer and a consumer for Europe."

(Additional reporting by Alejandro Lifschitz, editing by Stacey Joyce)

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