La Vanguardia – “Latin American Test: Geopolitical tensions between China and the US erupt in the elections”

Andrés Arauz, candidate of the Union for Hope, a party of the Ecuadorian left. RODRIGO BUENDIA / AFP

Latin American Test: Geopolitical tensions between China and the US erupt in the elections

Andy Robinson

01/29/2021 02:01; Updated 01/29/2021 10:55 AM

The first Latin American test for Joe Biden’s new Democratic administration may not be Venezuela or Cuba, but Ecuador. Right now, the left-wing candidate, the young economist Andrés Arauz, is leading the polls ten days before the first round of the presidential elections, on February 7.

Following the election of Luis Arce as president of Bolivia in October, a victory for Arauz, 33, a former minister in Rafael Correa’s government, would mean the partial reconstruction of the left-wing bloc that two decades ago challenged the historic hegemony of the United States in the region.

The Chinese presence in the economy has been the great point of friction between Quito and Washington

Arauz rejects almost all the policies agreed between the Trump Administration and the current president Lenin Moreno, a former vice president of Correa who took a 180 degree turn to approach Washington after winning the presidential elections in February 2017.

These pacts include an austere adjustment program with the International Monetary Fund that unleashed pitched battles in Quito in the fall of 2019 between indigenous peasants and the police, [led to] measures against the presence of China in the economy and pro-market reforms and privatizations.

Moreno, who is in Washington this week, also gave the US military the green light to the use a Galapagos Islands airport and agreed with Washington to expel the founder of Wikileaks, Julian Assange, from the Ecuadorian embassy in London in order to facilitate his extradition to the US

Conservative leader and former Coca-Cola executive Guillermo Lasso, the only one of the 16 presidential candidates who can prevent a victory for Arauz in the first round, would maintain many of these measures. But Arauz intends to establish a development program that is directed by a strong sovereign state, as well as to aid in rebuilding the regional bloc Unasur, which excludes the US. He also defends maintaining close economic ties with China.

The Donald Trump Administration already carried out a kind of interference in the electoral campaign by agreeing with Moreno to a loan of $3.5 billion dollars from the Development Financing Corporation (DFC) in January, a financial and geopolitical vehicle created under Trump’s orders in 2018 with the explicit purpose of standing up to China in Latin America. In return, Ecuador is required to cut economic ties with Beijing.

According to documents on the agreement consulted by La Vanguardia, the loans are conditional on the entry of private investments in public companies in sectors such as oil, electricity, transportation and telecommunications. Another condition is that Ecuador boycott the Chinese telecommunications company Huawei for the construction of its 5G network.

The relationship with China is a critical issue for Ecuador, [a country] which, with a [national] debt of almost 50,000 million euros, is going through a dangerous solvency crisis. True to Washington’s agenda, Moreno has replaced Chinese financing with a draconian IMF adjustment program.

When Correa declared a moratorium on Ecuadorian debt in 2008, he asked China for credit lines to avoid turning to the IMF. Chinese aid facilitated a spectacular recovery and modernization of Ecuadorian infrastructure. But the collapse in the price of raw materials in 2014 triggered the [current] price of public debt. Arauz rejects the IMF’s austerity plan and supports raising funds from China and other countries.

Biden’s reaction is difficult to predict. The new administration maintains an aggressive discourse against China. According to the former CEO of the corporation, Adam Boehler, quoted in the Financial Times two weeks ago, Biden’s Latin American team supports the anti-China program in Ecuador.

“The agreement with the DFC has more to do with a US foreign policy objective than with financing development,” said Rafael Correa, exiled in Brussels after a politicized judicial campaign against him and other members of the government. “The Biden Administration is likely to have a similar foreign policy,” he explained in a Skype interview.

However, experts consulted in the US doubt that the Biden Administration will implement such an aggressive program against the presence of China. “The Biden Administration has a different vision of foreign policy in Latin America … they are aware that, after the worst pandemic with an economic impact far greater than other regions of the world, Latin America needs to maintain economic relations with China,” says Kevin Gallagher, director of the Center for Global Development Policy at Boston University.

One indication that Biden may want to back down was the announcement this week that Boehler has been fired. Correa agrees that after a hypothetical victory for Arauz he does not have to “have attempts to destabilize,” he said.

Arauz hopes that Biden will join European governments in backing a new plan to inject up to two trillion dollars into developing economies – including Ecuador – from the IMF to combat the impact of the pandemic. This project “could be a great opportunity to start a dialogue with the US,” Arauz said in a telephone conversation.

However, Biden’s support for Juan Guaido and the sanctions against Venezuela will complicate the relationship with Arauz if he wins. “The US strategy in Latin America is anti-China and anti-Venezuela; Luis Arce’s victory in Bolivia is perceived as a threat in Washington and if Ecuador joins, then there would once again be a consolidated bloc that opposes the US strategy.”

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