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6 August 2012, Gateway House

Why we need an India-LAC dialogue

The past decade has seen a significant rise in trade and investment flows between India and the Latin American and Caribbean (LAC) region. With an international system in flux, it is time for India and LAC to work together to shape a global order that better reflects current economic realities.


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The first India-Latin American & Caribbean (LAC) Dialogue will take place in New Delhi on 7 August, 2012. The Latin delegation will be headed by Chile’s Foreign Minister, Alfredo Moreno. He will represent the Community of Latin American and Caribbean States (CELAC, in Spanish), of which Chile is presently the Chair. Representatives of Cuba and Venezuela, the other two members of the CELAC troika, will join Moreno in a meeting with India’s Foreign Minister S.M. Krishna.

At first sight, this might seem like another diplomatic exercise in flag-waving and platitudes. There are no pressing issues on the agenda of Indo-LAC relations.  India and the Latin American nations have a lot of other issues to attend to, on both the domestic and the foreign policy front. If that is the case, why bother now?

In fact, the opposite is true. A closer look shows that the timing of this first attempt at formalising official exchanges between India and the LAC nations as a whole could not be better; it could even be argued that such a dialogue is long overdue.  The LAC region is in a strong economic position right now, with low debt (28% of GDP), high foreign currency reserves ($800 billion) and booming economies. They are also eager to do business with India.

India and LAC countries have longstanding relations; with some countries in the region, India’s relations go back to the early days after independence. Over the past few years, India’s relations with Brazil have especially acquired a high profile—as has been evident in the India-Brazil-South Africa (IBSA) Dialogue established in 2003, and in the BRICS grouping (Brazil, Russia, India, China, South Africa)—the fourth BRICS Summit was hosted in New Delhi on 29 March 2012. President Lula’s three visits to India during his eight years in office also indicate Brazil’s focus on India. India’s relations with a number of other LAC countries, including Chile, are also flourishing.

Until now, however, India has not, for a variety of complex reasons, engaged the LAC region as a whole, as it does with Europe, for example, through dialogues with the European Union (EU). The LAC countries may be far from the degree of regional integration of the EU, but over the past two decades, the benefits of regionalism have become a driving force of Latin American foreign policies.

There are good reasons for this. The emergence of a variety of regional and sub-regional integration schemes is rooted in the need to cope with globalisation. These regional schemes provide “reef barriers” to contain the waves of globalisation. MERCOSUR, which brings together South America’s largest economies (Argentina, Brazil, Paraguay, Uruguay and now also Venezuela), is a prime example, but so are other regional entities that have emerged over the years.

These regional schemes in Latin America date back to the return of democracy in the countries of the region in the 1980s and early 1990s. From the founding of MERCOSUR in 1991 to a renewed impetus of the Andean Community, the Central American Common Market and the Caribbean Community (CARICOM), a “new regionalism” came to the fore.

This regionalism is very different from the one seen in the 1960s, with ALALC (the Asociación Latinoamericana de Libre Comercio) and the Andean Pact of the 1960s.  This is an “open regionalism” inspired partly by the experience of ASEAN (the Association of Southeast Nations). Based on export-led development (as opposed to import-substitution-industrialization, ISI), it looks at the region as a base from which to export to, and interact with, the rest of the world. In contrast to previous approaches—grounded in “export pessimism,” and closing off the region to outside competition—the new regionalism believes regional markets are suitable for “trial run” experiences for national firms, which could then take on bigger challenges elsewhere.

The 1990s also saw the rise of political cooperation in Latin America. Regional summit diplomacy became an established feature of the diplomatic landscape, with the Rio Group and the Ibero-American summits taking the lead in setting up regular meetings between regional heads of state. Until then, regular presidential meetings were rare, and many presidents hardly knew each other. Gradually, mechanisms for collective Latin American action emerged, leading to “inter-presidential diplomacy.” These mechanisms aimed at allowing the region to speak with one voice and to consolidate perspectives on the way forward.

This is what CELAC is all about. It has brought the LAC countries under one roof because its appeal cuts across political ideologies and party lines. CELAC began as an idea in 2010 in Cancún, as a Mexican initiative (though with strong Venezuelan inputs), and was formally established in July 2011.

The distinguished academic and researcher, Professor Andrés Serbin, has said that CELAC’s objectives include “the creation of a more balanced dialogue space with the United States, the promotion of regional integration, the coordination of policies at the regional level, and to fill in a vacuum as far as the Latin American political dialogue is concerned.”

Another goal is to create an umbrella entity that will bring under its purview and eventually replace altogether the many existing regional entities such as the Rio Group, the Latin American and Caribbean Summit, the Latin American and Caribbean System (SELA), based in Caracas, and the Latin American Integration Association (ALADI), based in Montevideo.

One of CELAC’s significant initiatives this year, under the Chilean presidency, has been this Indo-LAC Dialogue. And there is much to build on during the dialogue. In a world still affected by the aftermath of the financial crisis, India and Latin America stand out. Growing trade and investment flows (the latest being a $3 billion Indian investment in Venezuelan oil fields) between India and the LAC region demonstrate the upsurge of South-South economic links over the past decade. Between 2000 and 2009, India’s trade with LAC increased eight-fold to $20 billion. It was $25 billion in 2011, and is projected to reach $70 billion by 2015.

Building on this base, India should consider joining the Inter-American Development Bank as an observer (as China has done). New Delhi should also consider working more closely with the Economic Commission for Latin America and the Caribbean (ECLAC), the region’s think tank, which recently released its first report on the state of Indo-LAC trade and investment flows.

This first India-CELAC dialogue will also lift the level of exchanges from the purely economic to the loftier realm of high politics and global governance.  With an international system in flux, it is about time India and Latin America start working closely towards shaping a global order that better reflects current economic realities.

Ambassador Jorge Heine is CIGI Professor of Global Governance at the Balsillie School of International Affairs, Wilfrid Laurier University, in Waterloo, Ontario. His book, ‘Oxford Handbook of Modern Diplomacy’, co-edited with Andrew Cooper and Ramesh Thakur, will be published by Oxford University Press in 2013.

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