China-funded dam projects advance in Argentina

The iconic Perito Moreno glaciar, a UNESCO world heritage site which is under threat from a proposed hydroelectric project, environmentalists say (image: C_Leger)

China-funded dam projects advance in Argentina

Argentina’s ‘strategic integral’ relationship with China is showing no signs of disintegrating under the new government of Mauricio Macri. The two countries plan to announce further investment in existing projects, including the controversial Kirchner and Cepernic mega-dams, which have been criticised by green groups and which are currently under revision by the executive.

Macri was a staunch critic of the more than 20 energy, education and infrastructure deals signed by Argentina and China under his predecessor Cristina Kirchner. The president announced his intention to revise and even cancel any contracts he perceived to contain ‘irregularities’ and wrote to Yang Wanming, China’s ambassador in Argentina, expressing his concern.

Yet the Kirchner and Cepernic hydroelectric complex in the Santa Cruz region looks set to go ahead despite complaints about the project’s impacts on the Upsala, Spegazzini and Perito Moreno glaciars, all UNESCO world Heritage sites.

Environmental NGO FARN recently wrote to Juan José Aranguren, Argentina’s new energy and mining minister, urging a fundamental revision of the project’s environmental impact study. The initial study had been produced without a proper public consultation on the dams’ impacts, Andrés Napoli, FARN’s executive director, said.

The dams will cost US$4.7 billion and are financed by three Chinese banks; China Development Bank (CDB), the Industrial and Commerical Bank of China (ICBC), and the Bank of China (COB). Represas Patagonia, a consortium consisting of Argentine companies HidroCuyo and Electroeingenería and China’s Gezhouba group, will carry out the works expected to take five years.

The main work on the project has still not begun but Electroengenería sources told Diálogo Chino that approval could come within the next couple of months and that work will be allowed to proceed, pending some alterations to the initial plan.

The Argentine government denies that there will be any negative impacts but there is concern on the part of China over the delays in approving the project. CDB representatives were in Buenos Aires recently to seek assurances over the future of the dams from Argentina’s new finance minister Alfonso Prat-Gay.

“The government will go ahead with the dams, it’s the biggest infrastructure project in Argentina and will employ many workers.” said Gustavo Girado, an economist and coordinator at the University of Matanza’s Asia Pacific Observatory. “Stopping it would be a big economic problem for the government. We’ve already passed the point of no return. Other agreements can be analysed but this one will surely go ahead,” he added.

As well as the dams, the deal signed between the governments to renovate the fleet of trains and the state-run Belgrano Cargas network is on hold but will soon be authorised. This project involves a US$2.7 billion loan from CDB and ICBC and anticipates the future transit of agricultural goods to the Chile’s Pacific ports.

The deal also stipulated that part of the manufacture of the trains take place in Argentina, but Macri recently sacked the majority of employees at Fabricaciones Militares, the state run enterprise responsible for carrying out the work.

“The initial plan was that the trains be finished off in Argentina. But Macri is dismantling the state structures responsible for construction. It was the only sector in which could have some national component that wasn’t imported. But in spite of this, the deal is going ahead,” said Ernesto Fernández Taboada, executive director of the Argentina-China Chamber of Commerce.

Joint China-Argentina projects that are less advanced, however, look unlikely to materialise. Construction of two nuclear stations at a cost of a US$15 billion, of which China would finance 85%, was agreed in November 2015 but the project is now being reevaluated.

No looking back

The scenario vis-à-vis China has notably changed since Argentina’s disputatious presidential elections late last year. Macri has selected Diego Guelar, considered an important driver of the alliance between the two countries, as his ambassador in Beijing. Moreover, Macri has used a swap agreement with China (an exchange of currencies between central banks) to boost central bank reserves.

“I’m not coming in to preside over a rupture in the relationship with China, that would be crazy,” Guelar said in a recent presentation to congress. “It is our main banker, our main investor and our main market. You have to respect international pacts. If you fail to stick to one of them, you fail to stick to all of them. We need a predictable Argentina,” he said.

Guelar’s view is shared by Yang, who recently spoke of the ‘accelerated development’ of the relationship at an event in Buenos Aires. Yang pointed out that Macri will visit counterpart Xi Jinping at the G20 summit in September.

The tone of the relationship has shifted from one of political alliance to one of pragmatism. But this doesn’t mean that China will not face challenges, since Macri will also pursue closer relations with Argentina’s traditional partners Europe and the US.

Maintaining good relations with China will be nothing new for Macri, who during his two terms as governor of Buenos Aires visited the Asian country on various occasions. Moreover, the president chose to buy trains for the city’s metro system from China’s state-owned CITIC and supported the candidacy of new Chinese-born legislator Fernando Yuan Jian Ping, of the China-Argentina chamber or commerce.

“Everything points to a continuing and deepening of the relationship,” said Nestor Rivero, co-author of the book ‘Everything you need to know about China’ (Todo lo que necesitas saber sobre China). “The new government proposed to review some aspects of the deals that were signed in order to improve on them, but not to go back on them,” he said.

“There was never a real intention to negotiate strongly with China, it was pure rhetoric to question the previous government. The China relationship is not up for discussion under Macri,” says Ariel Slipak, an economist specializing in China-Argentina relations at the University of Moreno.

“His objective is to have non-ideological, commercial relations and show an apparent pragmatism. But to present yourself as non-ideological is ideological in itself,” Slipak adds.

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