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BUENOS AIRES / WASHINGTON (Reuters) – Argentina and China are planning an agreement in the coming days for the construction of the nation's fourth largest nuclear power plant, a multi-billion dollar project that would strengthen Beijing's growing influence in a major regional center of the United States ally.
A building bearing the logo of the Industrial and Commercial Bank of China Ltd. (ICBC) in Buenos Aires, Argentina. [Photo: Reuters]
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Argentina Expects to Announce Agreement on the Construction of the China-Funded Atucha III Nuclear Power Plant During Chinese President Xi Jinping's Official Visit to the G20 Summit of Leaders of the Industrialized Countries of Buenos Aires Juan Pablo Tripodi, head of Argentina's national investment agency, told Reuters in an interview.
The potential deal, valued at $ 8 billion, is emblematic of China's economic, diplomatic and cultural ties with Argentina. It is part of a broader push from Beijing to Latin America that has alarmed the United States, which views the region as their backyard and wary of China's motives.
This week's meeting between US President Donald Trump and his Chinese counterpart Xi Jinping on the sidelines of the G20 will focus on the trade war between their two countries, but the context will be the competition between the powers of influence in Latin America.
When Argentina negotiated a $ 56.3 billion financing deal with the International Monetary Fund (IMF) to revive its economy in crisis earlier this year, Trump expressed support for President Mauricio's plan and leadership. Macri.
But it is China that has become the key trading partner, investor and financier of Argentina, reveals a Reuters report on trade and investment. Beijing is injecting billions into the Argentine economy and positioning itself as a reliable lender for its economy in crisis.
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China and Argentina are expected to sign a currency swap deal this weekend, which doubles the initial amount of the line of credit to $ 18.7 billion. The agreement will make China the largest non-institutional lender in Argentina.
China is the main importer of Argentine soybeans, the most important cash crop of the South American country. Over the last 10 years, it has also become a major funder of Argentine projects, mainly infrastructure, for a total amount of about $ 18 billion, offering low interest rates ranging from 3 to 4% , according to a Reuters study on the Chinese government's funding data. compiled by Inter-American Dialogue, a non-profit think-tank based in Washington.
Negotiations on the Chinese financing of the Atucha III nuclear power plant are a source of major concern for the US government, said a senior Trump administration official at Reuters.
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Atucha III would be one of the largest projects funded by China in Argentina, according to Reuters review of data on the financing of the Chinese state.
The Argentine national newspaper Clarin said this weekend that if the deal was signed, China would lend Argentina $ 6.5 billion to repay in 20 years, with a deferral of amortization eight years and an annual interest of 4.5%. Reuters has not been able to confirm this information independently.
"These are infrastructure projects for which China arrives and provides loans with very low interest rates or that ask Chinese companies to do so," said a US official. "It creates an economic and political dependence on China, which is incredibly dangerous."
The message to Macri and other regional leaders is more and more that "your sovereignty can be lost if you are trapped in debt, you can lose your sovereignty to the benefit of the person who holds your debt," said the US official.
The Chinese Foreign Ministry strongly disagrees with this view.
"China's investments and financing in Latin America are in line with market rules and common international rules and practices and have no political conditions," the ministry said in a statement to Reuters.
The involvement of Chinese companies in projects related to water, electricity and roads has contributed to the economic and social development of Argentina, he said. added.
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Defending Argentina's relations with China, a government official in Argentina told Reuters that Beijing was a major investor and would become even more important in the future.
However, the official acknowledged that the concerns of the United States were not unfounded.
"Overall, I would say it's a fair warning and countries should consider it. I think Argentina takes this very seriously, "said the manager.
RECALIBRATING LINKS
China's attraction to Argentina can be attributed to three factors: natural resources, weak institutions and lack of other financing options in the country, said Juan Uriburu, an Argentine lawyer, who worked two large joint ventures between Argentina and China.
"China can afford to have these (interest) rates competitive. In the meantime, they are creating new markets for Chinese companies overseas, which means that Chinese companies will work, make products, manufacture locomotives, wagons, rails, and so on. Uriburu said.
Tripodi, the head of the Argentinian investment agency, has attributed the more favorable Macri business policy for rising Chinese investment. The interest of Chinese companies was growing "exponentially", he said.
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As a presidential candidate, Macri pledged to recalibrate Argentina's relations with China. According to her predecessor, Cristina Fernandez, Argentina had amended the law to allow Chinese companies to override the bid process if they funded projects, according to Margaret Myers, director of the China and Latin America Program at the Inter-American Dialogue. .
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When Macri took office at the end of 2015, he pledged to review the agreements reached by the Fernandez government with China. Atucha III, a railway project and two hydroelectric dams in the province of Santa Cruz, ruled by his late husband, were among the projects thrown into limbo.
The cross-cancellation clauses, however, made it difficult for Macri to stop larger projects, Uriburu said. Macri instead renegotiated certain conditions, including reducing the loan amount for hydroelectric dams from $ 4.7 to $ 4 billion.
In Brazil, right-wing President Jair Bolsonaro, the largest economy in Latin America, also took a tough stance against China during the election campaign, describing it as a predator seeking to dominate key industries. . But since his election victory, Bolsonaro has softened his position, saying that China is invited to invest in Brazil and that trade between the two countries could develop.
HEART AND SPIRITS
China's influence in Argentina goes beyond numbers. For example, he created Confucius institutes, cultural organizations, in the largest university of Argentina, the University of Buenos Aires, and a second college in the province of Buenos Aires.
Some US lawmakers have warned that the institutes, which are more than 100 in the world, are an attempt by China to strengthen its political influence, which Beijing denies.
In one of the most visible examples of Chinese soft power in Argentina, the government staged a televised event with the Chinese ambbadador earlier this month to introduce armored vehicles and other security equipment that China donated to help secure the G20 event.
Argentine security officials have announced to Reuters that they will hold a separate event to mark US aid to the summit, which will begin Friday.
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