EU confirms support for Guatemala, suggests passing laws to attract foreign investment

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By Daniel Villatoro García

Félix Fernández-Shaw, director of the European Commission (EC) for Latin America and the Caribbean, visited Guatemala this week with representatives of European banks, entities and companies to learn about the reality of the country and propose investment projects.

In this interview he talks about the importance of achieving a sign of openness and unlocking the country to the resources and an international public signal that we can return to Guatemala, after the difficulties during the change of government.

The official said that the country is in a situation where the noise generated in recent months must be reversed a little, because it is already known that noise does not like capital, so that when it stabilizes, more investment can be attracted.

What is the Investment Agenda and what opportunity does Guatemala have to attract capital?

The Investment Agenda for Latin America and the Caribbean called Global Gateway was launched at the European Union-CELAC summit 2023 in Brussels, Belgium, where there was an understanding between the two regions that Latin America and the Caribbean want more European investment, but it has to be productive and not extractive.

For that, what is needed is capital, technology and taking the risks. And we, from the European Union (EU), want to continue investing, but above all on two key issues: green transition and digital transition.

These are two elements that the region, and Guatemala is not the exception, it understands very well, as capital and technology are needed to produce added value here.

What was the reason for the country visit?

We came with a group of development banks and companies and we had several meetings to understand what the reality of Guatemala is and select some important or complex projects where private and public investment has to go hand in hand. What we are looking for is for European investment to help the Guatemalan government achieve policy objectives.

However, this is complicated because it requires private resources to be invested in Guatemala. Now a new moment opens up and although it is not yet all settled, we see an opportunity opens. What we want is to encourage European investment in the two above-mentioned issues, but in a way that benefits people and not just a few.

Have you been able to visualize any kind of projects, including the Motagua River?

With the Motagua River, with the valley and with the municipalities, we have long seen how the situation is becoming an example of what needs to be done, what should be done and what should not be done.

The Motagua River is responsible for 2% of the dumping of plastics into the sea and is also tremendously contaminated. That is one of those projects where many things coincide and it is difficult because on the one hand you need a great political line from the government and municipalities (including that of Guatemala). It is necessary to clean up the entire part of the landfill in zone 3; to work in the waters of the Las Vacas and Motagua river; to treat garbage; to clean the river; and to create a citizen awareness of recycling and a chain of management value.

In Europe what we are doing is collecting the garbage, but you can no longer collect and throw. The result is to try to manage cleaning and recycling, because at the end of the value chain there has to be someone who pays for the garbage and what can be done with it.

That requires a complex combination of public policy and investment, municipal, private, capital, technology and what we are trying to do is that all this can be put together, clean the valley and the river and ensure that this does not happen again.

How much is going to be invested in that and other projects?

We are currently waiting for some things, as the Government plan contains 96 garbage collection and wastewater treatment plants; and a similar project is being prepared for zone 3, closing that landfill.

Today, the main element is a $200 million loan from the Inter-American Development Bank (IDB), which the EU, the European Investment Bank, and other public banks would be willing to complete or duplicate.

However, for that it is important that Guatemala be able to assume public debt, because it is an international loan, which is currently being held in Congress, and what we have proposed is to go to Congress and present the case together with the government, because if the IDB is not given the opportunity to finance such projects, European banks will not enter.

What is the image of Guatemala in Europe as an investment destination?

In recent months Guatemala has not given a good image, but it has very strong macroeconomic figures and a good reputation as an international payer. If Congress approves the above-mentioned loan, and is supported by the European Investment Bank, what is going to happen is an international public signal that we can return to Guatemala. The important thing is the sign of opening and unlocking Guatemala to investment.

In what aspects should the country improve?

The issue of corruption is very important, as it is always a problem for international investment and the funds will go to the country where this situation is lower. But I think the new government is putting on the table a series of reflections and public investment policy plans, which are very interesting to us.

We have not only talked about the Motagua River, but also about the digital issues, the last kilometer connectivity, the work being done in cybersecurity, the electricity issue, generation with more renewable resources and the Central American Regional Electricity Market.

Can you support the European Union on all these issues?

Oh, sure. We have focused a little on issues, but there is also the one presented by High Representative Josep Borrell to support Petén, to work on sustainable forest management, forest resources and tourism management. With that we have a great package of projects that the EU would be very willing to support with public and private investment.

What should be addressed as a matter of priority for this to take place?

It is very curious that of the Central American countries with which the EU has a free trade agreement in force, Guatemala is the only one that does not have in force a Competition Law, which is currently in the process of being in Congress.

It is very difficult for a European investor to understand how to invest in a country where there is no law to protect its investments from possible unfair competition.Then, passing that law would greatly strengthen Guatemala’s possibilities.

If there is also a little public debt, if the EU gives a signal of investment and publicly supports, it will help Guatemala to regain market confidence.

In which other areas are there investment opportunities?

At the moment I believe that the Government of Guatemala is trying to recover an investment plan in infrastructure, but also in education and others, although it has a serious problem of public resources and budget.

But that is why we have come, not only the EC and the EU that I represent, but also the European Investment Bank, the German, French and Spanish development banks and some other ministries to get to know the reality of Guatemala closely, because we thought it was the right time, now that the new government is just started.

Fernández-Shaw visited the country accompanied by European and development banks to promote the Investment Agenda of the European Strategy called Global Gateway.
The delegation

The delegation that visited Guatemala and accompanied Fernández-Shaw and the European Union ambassador to the country, Thomas Peyker, is as follows:

It was reported that his visit coincides with the Annual Meeting of the Euroclimate Regional Programme with the participation of representatives of the 33 Latin American and Caribbean countries. They also made an exploratory visit to the Las Vacas River, to identify possible programs to support the rescue of the Motagua River basin, within the framework of the Global Gateway initiative.

Only for the cleaning of the Motagua River basin would a public-private alliance be necessary in which at least US$1 billion is invested, the European official said on March 4 in statements after a meeting with the Vice President of the Republic, Karin Herrera.

Fernández-Shaw also met, on March 5, with the President of the Republic, Bernardo Arévalo. They raised their willingness to support the Government of Guatemala at this opening point. The delegation indicated that President Arévalo requested support to increase European investments in Guatemala.

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This article has been translated from the original which first appeared in Prensa Libre