Why Colombia’s president prefers China’s cash over EU economics

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Good morning. Leaders from Latin America and the EU have so far failed to agree a joint communiqué, with Nicaragua refusing to accept any text condemning the war in Ukraine.

Today, Colombia’s president explains why Chinese money is better than EU solutions and our Moscow bureau chief ponders how serious Vladimir Putin is about destroying the Ukraine grain deal.

Good plan

Colombia’s president Gustavo Petro has said that when it comes to climate change, the EU’s market-based approach is far and away outplayed by China’s state-subsidised central planning, writes Ian Johnston.

Context: Latin American and Caribbean leaders are in town for a summit with the EU, which wraps up today. Europe wants to rekindle relations with the region but faces competition from the world’s second-largest economy, China.

The EU has not held a summit with the continent’s Celac body for eight years, but Latin American countries have certainly not been lonely on the international stage.

Over the past 20 years, China has increased trade with Latin American and Caribbean countries 26-fold, from $12bn to $310bn, surpassing trade between the region and the EU and making China its second largest trading partner behind the US.

Comparing Europe, China and the United States on climate policy, Petro told the FT: “There’s a greater social conscience in the European Union compared to North American society, which also has a denialist tendency in the climate crisis.”

But China’s vast funding makes it a more attractive partner because “China has a greater planning power than the European Union.” Petro said the EU, on the other hand, “has delegated to the market, and to market forces, the possibility of overcoming the climate crisis”.

“This leads to two models on which humanity depends at this moment,” Petro said. “Can instruments like carbon taxes, insurance policies and profitability criteria efficiently lead to a decarbonisation of the economy in the short term? Until now, the answer is negative.”

Petro, Colombia’s first leftist president and a former guerrilla member, said that responding to climate change requires revisiting “planned” economic solutions once reviled in Europe.

“Where there is no profitability, there needs to be public investment,” he said. “When it comes to revitalising the Amazon forest, the word ‘planning’ reappears as a new value that had been destroyed decades ago in public policy.”

Chart du jour: Circumvention

Exports of cars and other goods from Armenia to Russia have surged, with trade between the two countries almost doubling in 2022 as Russian consumers seek conduits to avoid western sanctions.

Grain drain

Russia’s withdrawal from a deal to ship Ukraine’s grain on to world markets threatens a vital economic lifeline for Kyiv — and gives Moscow another cudgel to aid its invasion of the country, writes Max Seddon.

Context: Vladimir Putin’s decision on Monday isn’t the first time Russia has sought to exit the Black Sea grain initiative, a pact brokered by the UN and Turkey a year ago to ensure Ukraine’s plentiful agriculture exports reach global markets.

When Russia did the same last autumn, Turkey pushed Russia back into compliance within days. But people close to the talks say Moscow looks more serious this time.

Moscow cancelled a planned trip earlier this month by Rebeca Grynspan, the UN diplomat in charge of the talks, to discuss renewing the deal, and has previously pushed an alternative plan to sell its own grain instead of Ukraine’s.

Ostensibly, the dispute is over what Putin claims is the west’s failure to uphold its end of the bargain by allowing Russia’s own exports back on to the market. 

The Kremlin has said it will rejoin if the sticking points are resolved, but that would go further than several EU member states — who have the power of veto — are prepared to go. 

Those include readmitting a big state-run bank to the Swift payment system, releasing frozen Russian funds in the west, allowing Russia to import agricultural components with potential military use, and reopening a mothballed ammonia pipeline across Ukraine.

The geopolitical ramifications imply that Putin also has broader goals in mind. Russia has used the grain deal to rally countries in the global south — particularly in Africa, where food shortages could risk hunger for millions — against western sanctions and win sympathy for its stance on the war.

That could indicate, as one person close to the talks says, that Russia’s withdrawal is macho brinkmanship “just to show they can”. 

African leaders plan to descend en masse on St Petersburg next week for a summit with Putin, giving him additional impetus to win them over. Putin is also expected to make a rare foreign visit to Turkey next month, possibly using the grain deal to re-establish a dominant role in his turbulent relationship with President Recep Tayyip Erdoğan.

Western countries aren’t panicking just yet: One EU official refers to “suspension”, not “termination”, and eyes “a window of opportunity to continue negotiations”.

What to watch today

1. Second day of EU-Celac summit.

2. Portugal hosts Eurafrican forum in Cascais.

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