China, vying with US in Latin America, eyes Argentina nuclear deal
BUENOS AIRES/ WASHINGTON: 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 multi-billion dollar project that would cement Beijing’s deepening influence in a key regional US ally.
Argentina hopes to announce an agreement on the Chinesefinanced 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 industrialized nations in Buenos Aires, Juan Pablo Tripodi, head of Argentina’s national investment agency, told Reuters in an interview.
The potential deal, reportedly worth up to US$8 billion, 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 United States, 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 US$56.3 billion financing deal with the International Monetary Fund (IMF) 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 Reuters 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 swap deal this weekend that doubles the original amount of the credit line to US$18.7 billion.
The deal will make China the biggest non-institutional lender to Argentina. China is the main importer of Argentine soybeans, 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 US$18 billion, offering low interest rates of between 3 and 4 per cent, according to a Reuters review of Chinese state funding data compiled by the Inter-American Dialogue, a Washington-based non-profit think-tank.
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 told Reuters.
Atucha III would be one of the biggest projects financed by China in Argentina, according to the Reuters review of Chinese state funding data.
Argentina’s national newspaper Clarin reported at the weekend that if the deal was signed, China would loan Argentina US$6.5 billion to be repaid in 20 years, with eight years of grace and a 4.5 per cent annual interest.
Reuters was not able to independently confirm these details.
“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.
“China’s investment and financing in Latin America are in line with market rules and common international rules and practices, and do not have any political conditions attached,” the ministry said in a statement to Reuters.
The involvement of Chinese companies in water, power and road projects has helped to drive Argentine economic and social development, it said.
Defending Argentina’s relationship with China, an Argentine government official told Reuters that Beijing was an important investor and would only become more important in the future.
However, the official acknowledged the US concerns were not without merit.
“Overall, I would say it’s a fair warning and it’s something countries should take into consideration. I think Argentina takes it into consideration very seriously,” the official said.
China’s attraction to Argentina can be attributed to three factors: natural resources, weak institutions, and the country’s lack of other financing options, according to Juan Uriburu, an Argentine lawyer who has worked on two major Argentina-China joint ventures.
“China can afford to have these competitive (interest) rates. In the meantime, what they create are new markets for Chinese companies abroad, which back home means Chinese companies will be working, making the
These are infrastructure projects where China is coming in and providing very low interest loans or they are just having Chinese companies do it. US official
products, making the locomotives, the cars, the rails, everything,” Uriburu said.
Tripodi, the Argentine investment agency head, credited Macri’s more business-friendly policies for the uptick in Chinese investment. — Reuters