Argentina and China to close their fourth nuclear power deal following G20 summit
ARGENTINA and China are aiming to close a deal within days for the construction of the South American nation’s fourth nuclear power plant, a multibillion-dollar project that would cement Beijing’s deepening influence in a key regional US ally.
Argentina hopes to announce an agreement on the Chinese-financed construction of the Atucha III nuclear power plant during Chinese President Xi Jinping’s state visit on Sunday, following the summit of leaders of G20 industrialised nations in Buenos Aires, said Juan Pablo Tripodi, head of Argentina’s national investment agency.
The potential deal, reportedly worth up to $8 billion (R111bn), is emblematic of China’s strengthening of economic, diplomatic and cultural ties with Argentina. It is part of a wider push by Beijing into Latin America that has alarmed the US, which views the region as its backyard and is suspicious of China’s motives.
The focus of this week’s meeting between US President Donald Trump and his Chinese counterpart Xi Jinping on the sidelines of G20 will be on their two countries’ trade war, but the backdrop will be the competition between the powers for influence in Latin America.
When Argentina negotiated a $56.3bn financing deal with the International Monetary Fund to rescue its troubled economy earlier this year, Trump voiced his support for the plan and President Mauricio Macri’s leadership.
But it is China that has emerged as Argentina’s critical trading partner, investor and financier, a review of trade and investment data shows, with Beijing pumping billions into Argentina’s economy and positioning itself as a reliable lender for its crisis-stricken economy.
China and Argentina are expected to seal a currency swop deal this weekend that doubles the original amount of the credit line to $18.7bn. The deal will make China the biggest non-institutional lender to Argentina.
China is the main importer of Argentine soya beans, the South American country’s biggest cash crop. In the last 10 years, it has also emerged as a major financier of Argentine projects, mainly infrastructure, worth a total of about $18bn, offering low interest rates of between 3 and 4 percent.
The negotiations on Chinese financing of the Atucha III nuclear power plant are a key cause for concern for the US government, a senior Trump administration official said.
Atucha III would be one of the biggest projects financed by China in Argentina.
Argentina’s national newspaper Clarin reported at the weekend that if the deal was signed, China would loan Argentina $6.5bn to be repaid in 20 years, with eight years of grace and a 4.5 percent annual interest.
“These are infrastructure projects where China is coming in and providing very low-interest loans or they are just having Chinese companies do it,” the US official said. “It’s creating an economic and political dependency on China that’s incredibly dangerous.”
The message to Macri and other regional leaders is increasingly that “your sovereignty can be lost by being so ensnared in debt, you can lose your sovereignty to the person who holds your debt,” the US official said.
China’s foreign ministry strongly disputes that view.
Defending Argentina’s relationship with China, an Argentine government official said Beijing was an important investor and would only become more important in the future. | Reuters