Argentina at risk of being trapped in debt by China
While there is growing discomfort among African and other developing states about Chinese loans, Argentina is also at risk of being trapped in debt by China.
Chinese investment is unlike how other states do it. China has been infamous for a long time because of its skewed and draconian economic policies and its debt trap diplomacy.
It is infamous for providing huge loans to economical weaker nations under the Belt and Road Initiative; usually the collateral would be a state resource.
Djibouti, Tonga, Maldives, the Republic of the Congo, Kyrgyzstan, Cambodia, Niger, Laos, Zambia, Samoa, Vanuatu, and Mongolia emerge as examples of states in distress over China debts.
In the event of non-repayment within the stipulated time, China has taken over the resources, sometimes even denying rights to the victim nation over those resources.
China’s modus operandi was the same in Sri Lanka, when Colombo needed to give up the port of Hambantota to China on a 99-year lease because of non-repayment of Chinese loans.
Now, Argentina will potentially become the largest state to join the Chinese Belt and Road Initiative in Latin America. In the past years, China has shown immense interest in Latin American countries and the proposition of the BRI comes at a time when Argentina is already heavily indebted to the US.
How will this happen? By joining the BRI, Argentina could open Chinese finance for crucial investment in infrastructure and transport, fossil and renewable power, mining, production, agriculture, innovation, and the IT sector.
This would empower the nation to connect and mend the infrastructure gaps and better incorporate with nations, for example, Chile, which appreciates solid business passages that associate it to foreign business sectors, subsequently bringing down coordination costs and upgrading competitiveness, the Chinese promise.
All the promises that China has made to Argentina have definitely upped the nation’s hopes in restructuring its plummeting economy, but it comes at a price: Argentina is running at a risk of severing its ties with the US, while it enters into new trade relations with the Chinese.
The US and China are equally vested in making a stronghold over the global economy. US President Joe Biden, for instance, promised to repair ties with the world during his inauguration. These ties are expected to include that.
China, however, more often than not uses all the unfair means to expand its economic influence. And the BRI is nothing short of a Chinese ploy to access entry into the developing nations and claiming it as an economic colony.
The Belt and Road Initiative is a Chinese state strategy and looks for logical collaboration with Argentina. Formally launched in 2013, the initiative initially tried to resuscitate the age old Silk Road and maritime trade routes but has since extended its objective to improve political and financial participation with nations that officially endorse it.
In short, China, through the BRI, is trying to get into the seams and folds of a state’s economic and political structure and eat it up from within.
Argentina has in the past decade seen a lot of ideological inconsistency when it came to its leaders.
While the bilateral relations with China intensified during the government of Cristina Fernández de Kirchner between 2007-15, Mauricio Macri questioned several flagship Chinese projects when he came to power in 2015. That also changed when Alberto Fernández took office in December 2019.
Fernández expects to renew the relationship and reactivate the disputable Chinese-moved dams in Santa Cruz province, as well as nuclear power plants.
The only snag they are facing is that China does not want to make dealings with a state that is running in debt.
Latin American Center for Chinese Political and Economic Studies, executive director Diego Mazzoccone says, “For China, it’s important that Argentina is not in default, that it can successfully finish negotiating the foreign debt. No investor wants to invest in a country in default.”
DANGERS OF BELT AND ROAD INITIATIVE
Fundamentally, BRI was being known as a significant infrastructure initiative, which by creating streets, railroads, and ocean courses would make the movement of goods and services between various nations simpler and less expensive, and subsequently advancing global trade.
China is attempting to make the world grasp the contention that the BRI undertaking will prove to be helpful to developing nations in upgrading bilateral trade, financial relations and network. While clarifying the advantages of BRI, endeavors are being made openly talk to shroud its political, monetary and geopolitical ramifications and dangers.
And now Argentina is at risk of falling prey to China’s ploy of overtaking it through the ruse of “helping the nation develop”, and there will be absolutely no way for Argentina to get out of the quicksand once they step into it.
Although China’s intentions and motivations are slowly becoming clear to the world, it is still a known fact that the nations that need help would try to seek it in any way possible.
In this light, China enters as the Good Samaritan but is actually a Trojan horse, driven only towards fulfilling its own selfish interests and its dreams of global dominion.
By Juan Carlos,
International affairs/geo-politics analyst