The opening contest of the Beijing Olympics at the Bird’s Nest Stadium on Friday marked the start of serious business for two Latin American presidents who have made their own unusual bids to achieve success. in the Winter Olympics.
Fernández will meet Chinese president Xi Jinping on Sunday, where he is expected to sign Argentina to Belt and Road Initiative. Argentina will become the largest Latin American country to participate in China’s leading infrastructure and investment project to date.
Lasso, who will also meet Xi as well as Chinese Premier Li Keqiang, is on a two-pronged mission. He wants to renegotiate the terms of Ecuador’s $4 billion debt and launch negotiations with China on a free trade agreement (FTA).
The 2022 Winter Olympics have been beset by controversy, with countries like the US, UK and Australia launching diplomatic boycott and refused to send their representatives to the Olympics because of China’s human rights record.
The two Latin American leaders will join leaders such as Russia, Qatar and Thailand to choose to attend.
For the Argentinian in particular, the duration of a trip to Beijing is slim. The Fernández administration has just reached a draft agreement with the IMF to debt restructuring $44.5 billionbut a final staff-level agreement is still pending and the IMF says it is still working with its counterparts in Buenos Aires.
Some observers worry that by going to Beijing now and meeting Xi, Fernández is sending the wrong message to the fund and its main shareholder, the US.
“This is not the time to go,” said Patricio Giusto, director of the Sino-Argentine Observatory, a think tank in Buenos Aires. He said the trip was likely to deal “a big blow” to Argentina’s hopes of completing the deal with the IMF.
But the leftist Peronist government has dismissed those concerns, saying the trip has been under way since Fernández took office in early 2020. Its purpose was “not to offend anyone”, but rather to advance Argentina’s national interests, a source close to the president told the Financial Times.
Along with applying for Belt and Road, Argentinians can seek more loans from China. The two countries have a $19 billion currency swap deal starting in 2009, and Buenos Aires wants to expand it by about $3 billion.
Argentina’s net foreign exchange reserves are almost depleted and are estimated to fall below $6 billion in December, while the country must pay $2.8 billion to the IMF next month. If the deal with the fund goes through or is blocked by the Argentine Congress, Fernández may need a contingency plan to avert a debt crisis.
Debt is also a problem for Ecuador. During the leftist government of Rafael Correa from 2007 to 2017, the Andes nation became indebted to China and agreed to repay many of its loans with oil. Lasso said Correa had agreed to unfavorable terms for Ecuador and instead wanted a cash refund, freeing up more oil to sell on the spot market, where prices are high.
Lasso’s other stated goal is an FTA, after years of steadily increasing trade between Ecuador and China. China consumes 15.8% of Ecuador’s exports in 2020, up from just 3.9% in 2015. China buys oil, shrimp, bananas, cut flowers, cocoa and timber from Quito.
The shrimp industry has grown particularly rapidly and Ecuador, a country with less than 18 million inhabitants, is currently the world’s largest shrimp exporter. Half of that goes to China, where an expanding middle class is gaining a taste for seafood once considered a luxury.
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However, Ecuadorian shrimp farmers pay a 2% tax on exports to China, while the country’s banana growers pay 10%. Lasso wants an FTA to abolish those penalties.
“The government proposal is to have an agreement signed within a year,” said Gustavo Cáeres, head of the Ecuador-China Chamber of Commerce. “It’s a very ambitious goal, but China is really important to us. This is our second largest trading partner after the US. ”
Sebastián Hurtado, head of Ecuadorian political risk consultancy Prófitas, said Lasso’s trip to China could serve as “a pressure mechanism” to remind the Biden administration that Quito also wants an FTA with Washington and it’s a small but important partner in the region.
With Peru and Chile has moved to the left in recent elections and Colombia may be about to do the same later this year, Lasso’s government may be the only right-wing government in the Andes by the end of 2022.
“Ecuador is in an interesting geopolitical position at the moment,” Hurtado said. “It has some leverage with the United States.”