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 regarding the country’s reality and propose investment projects.
In this interview he talks regarding the importance of achieving a signal of openness and unlocking of the country’s resources and “an international public signal that we can return to Guatemala”, following the difficulties during the change of government.
The official said that the country “is in a situation in which the noise generated in recent months must be reversed a little, since it is already known that capital does not like noise,” so that “when it stabilizes,” more investment can be attracted.
What does the Investment Agenda consist of 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 in July 2023 in Brussels, Belgium, where there was an understanding between both 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 risks. And we, from the European Union (EU), what we want is to continue investing, but above all in two key issues: green transition and digital transition.
These are two elements that the region, and Guatemala is no exception, understands very well, since capital and technology are needed to produce added value here.
What was the reason for the visit to the country?
We came with a group of development banks and companies and had various meetings to understand what the reality of Guatemala is and select some important or complex projects where private and public investment have to go hand in hand. What we are looking for is that European investment can 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 is opening up and although everything is not yet settled, we see that an opportunity is opening up. What we want is to encourage European investment in the two aforementioned issues, but in a way that benefits people and not just a few.
Have you been able to visualize any type of projects, including the Motagua River project?
With the Motagua River, with the valley and with the municipalities, we have long seen how the situation is becoming an example of what has to be done, what should be done and what should not be done.
The Motagua River is responsible for 2% of plastic dumping 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 a great political line is needed from the government and the municipalities (including that of Guatemala). The entire part of the zone 3 landfill is required to be cleaned; work in the waters of the Las Vacas and Motagua rivers; garbage treatment; clean the river; and create citizen awareness regarding recycling and a management value chain.
In Europe what we are doing is collecting garbage, but it can no longer be collected and thrown away. The result is trying to manage cleaning and recycling, since at the end of the value chain there has to be someone who pays for the garbage and what can be done with it.
This requires a complex combination of public, municipal, private policy and investment, capital, technology, and what we are trying to do is bring all of this together, clean the valley and the river, and ensure that this does not happen once more.
How much is going to be invested in that and other projects?
Right now we are waiting for some things, since the Government plan includes 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 loan from the Inter-American Development Bank (IDB) for US$200 million that the EU, the European Investment Bank, and other public banks would be willing to complete or double.
However, for that it is important that Guatemala be able to assume public debt, because it is an international loan, which at the moment is stopped in Congress, and what we have proposed is to go speak to Congress and present the case together with the government, because If the IDB is not given the opportunity to finance these types of projects, the 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 solid macroeconomic figures and a good reputation as an international payer. If Congress approves the aforementioned loan, and it is supported by the European Investment Bank, what will be given is an international public signal of “we can return to Guatemala.” The important thing is the signal of openness and unlocking of Guatemala to investment.
In what aspects should the country improve?
The issue of corruption is very important, since it is always a problem for international investment and the funds will go to the country where this situation is less. But I believe that the new government is putting on the table a series of reflections and public investment policy plans, which are of great interest to us.
We have not only talked regarding the Motagua River, but also regarding digital issues, last mile connectivity, the work being done in cybersecurity, the electrical issue, generation with more renewable resources and the Central American Regional Electricity Market.
Can the European Union support all these issues?
Clear. We have focused the conversation a little on topics, but there is also the one presented by High Representative Josep Borrell to support Petén, 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 must be addressed as a priority for this to be carried out?
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 a Competition Law in force, which is currently being processed in Congress.
It is very difficult for a European investor to understand how to invest in a country where there is no law that protects their investments once morest possible unfair competition. Therefore, approving this law would greatly strengthen Guatemala’s possibilities.
If, in addition to that, there is a little public debt, if the EU gives a signal of investment and publicly supports it, it will help a lot for Guatemala to regain market confidence.
In what other areas are there investment opportunities?
At this time 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 learn more regarding the reality of Guatemala, because we thought that It was the right time, now that the new government has 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
Part of the delegation that visited Guatemala and accompanied Fernández-Shaw and the European Union ambassador in the country, Thomas Peyker, is the following:
- María González Mata, head of EU cooperation.
- Lianne Guerra, from the General Directorate of International Associations (DG INTPA).
- Kristin Lang, executive of the European Union Division of the European Investment Bank (EIB); José Manuel Otero, EIB executive in Central America.
- Dulce Cortés, executive of Proparco, a subsidiary of the French Development Agency (AFD).
- Clovis Battaglia, regional representative of Experts France (EF) for Central America of the AFD
- Beatriz Morant, representative of the Spanish Development Financing Company (Cofides).
- Mauricio Chacón, head of Representation in Spain and Europe at the Central American Bank for Economic Integration (CABEI).
It was reported that his visit coincides with the Annual Meeting of the Euroclima Regional Program, which was attended by representatives of the 33 countries of Latin America and the Caribbean. They also made an exploratory visit to the Las Vacas River, to identify possible support programs for the rescue of the Motagua River basin, within the framework of the Global Gateway initiative.
Only to clean the Motagua River basin would a public-private alliance be necessary in which at least US$1 billion would be invested, the European official indicated on March 4 in statements following 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 expressed their willingness to support the Government of Guatemala in this moment of opening. The delegation indicated that President Arévalo requested support to increase European investments in Guatemala.
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