{"id":2470,"date":"2017-10-22T11:07:22","date_gmt":"2017-10-22T11:07:22","guid":{"rendered":"https:\/\/armando.info\/?p=2470"},"modified":"2017-10-22T11:07:22","modified_gmt":"2017-10-22T11:07:22","slug":"china-the-fierce-partner","status":"publish","type":"post","link":"https:\/\/armando.info\/en\/china-the-fierce-partner\/","title":{"rendered":"China, the Fierce Partner"},"content":{"rendered":"\n

The \r\naggressive expansion of China in Latin America has marked the last decade. \r\nEcuador and Venezuela have been two of the main destinations for Chinese \r\nfinancing, technology and labor in the region. The alliance took shape in \r\nVenezuela with the creation of the Venezuelan Chinese Fund, from which the \r\ngovernment of the self-styled Bolivarian Revolution awarded millionaire \r\ncontracts to Chinese companies for the execution of infrastructure works, \r\nhousing construction or constructions for the electrical system, among other \r\nareas. Meanwhile in Ecuador, the close relationship with China marked the \r\nten-year management of Rafael Correa, who has just left power. Seven out of ten \r\nworks in that period were performed by a Chinese company, almost always tied to \r\nfinancing by a Chinese bank. Some of these projects, both in Ecuador and in \r\nVenezuela, are today failed projects. The review of some of these agreements \r\nshows the \"fine print\" and the requirements imposed by the Chinese when doing \r\nbusiness with these countries.  \r\n<\/p>\n\n\r\n\n

<\/p>\n\n\n

The Formula in Venezuela<\/h2>\n\n\n

Venezuela \r\nholds onto China. In mid-September 2017, the state oil company Petr\u00f3leos de \r\nVenezuela (Pdvsa) published for the first time the price of Venezuelan oil in \r\nyuans. It was Caracas response to the financial sanctions imposed by the Donald \r\nTrump administration to prevent the Venezuelan government from issuing a new \r\ndebt. \"We have decided to start a new stage of foreign trade with the use of \r\ninternationally convertible currencies beyond the US dollar,\" Venezuelan \r\nPresident Nicol\u00e1s Maduro had warned in early September, after the US measure was \r\nknown.<\/p>\n\n\r\n\n

The \r\nprice of the Venezuelan crude oil in yuans seems more than a symbol. It looks \r\nlike the corollary of the relationship that Caracas and Beijing forged from the \r\ngovernment of Hugo Ch\u00e1vez as soon as the new century began. Although initially \r\nconceived as the formula for the \"development\" of \"socialist\" Venezuela, it has \r\nresulted in an increasing dependence on the Caribbean nation with the Asian \r\nnation.<\/p>\n\n\n

The results for the South American nation are more than just doubtful.<\/p><\/blockquote><\/figure>\n\n\n

The \r\nmoment in which Venezuela joined its destiny to that of China could be 2008. \r\nThat year, the office of the Venezuelan Chinese Fund was opened, which \r\nultimately resulted in a peculiar and questioned financing system of at least \r\n50,000 million dollars, supported by Venezuelan oil, the purchase of Chinese \r\nmerchandise and the hiring of its companies for works of infrastructure, housing \r\nor the electrical system, among other areas.<\/p>\n\n\r\n\n

\"This \r\nis a wonderful formula, financing for development. It is a socialist \r\ndevelopment,\" Ch\u00e1vez predicted in May of that same year. More than a decade \r\nlater, after three sections of that binational fund having been executed, with \r\nVenezuela heading for the fourth consecutive year of contraction and on the \r\nbrink of hyperinflation, the results for the South American nation are more than \r\njust doubtful.<\/p>\n\n\r\n\n

Only \r\nOdebrecht, the Brazilian giant that fell from grace due to accusations of \r\ncorruption in almost all of Latin America, can boast about such favorable \r\nagreements with chavismo<\/I> as those achieved by companies like China \r\nRailway Engineering Corporation (CREC), China Camc Engineering (CAMC) or Citic \r\nConstruction Co Ltd (CITIC), among others.<\/B><\/p>\n\n\r\n\n

<\/B><\/p>\n\n\n

Opacity \"Ad Hoc\" in Ecuador<\/h2>\n\n\n

The \r\nrelationship between the Ecuadorian Government and several Chinese companies is \r\ndeep and hard to unravel. The contracts that bind them are difficult to access. \r\nKnowing the precise amounts, conditions, institutions involved is a complex \r\ntask: there is no state office or a single web portal that gathers all the \r\ninformation. The information is scattered among the government entities that \r\nhave signed the contracts, where everything happens slowly, and not all the \r\ninformation requested is obtained: only three out of thirteen requests for \r\ninformation received a positive response through the submission of seven \r\ncontracts. Give reasons to explain what motivates the labyrinth that has to be \r\nwalked to find the contracts of Chinese companies would be speculating. However, \r\nthere is an obvious truth: the lack of transparency is one of the roots of \r\ncorruption, both here and in China.<\/p>\n\n\r\n\n

<\/p>\n\n\n

\"\"<\/figure>\n\n\n

The \r\nlack of transparency also has a cost. A study by the FARO group \u2014made in \r\n2011 with support from the Inter-American Development Bank (IDB)\u2014 determined \r\nthat, for example, the lack of transparency in the oil area entails a cost to \r\nEcuador of at least 2.87% of the gross domestic product \u2014more than 2,000 million \r\ndollars, a lot of money. And if it is public money, it is even much more. For \r\nexample, is it enough to pay in full for the Coca Codo Sinclair hydroelectric \r\nplant (the largest dam in the country, in the northeast, on the Napo \r\nprovince).<\/p>\n\n\r\n\n

In \r\nthe seven contracts obtained by requesting information, there is a common \r\ndenominator: hiring was made under a special system, a modality that allows, in \r\ncertain cases, contracting under more flexible parameters. In five of the seven \r\ncontracts, the work was tied to the financing of Chinese banks. Both \r\npossibilities are provided for in the Organic Law on Public Enterprises, \r\napproved in 2009. According to the councilor and former mayor of Quito, Daniela \r\nChac\u00f3n, this type of contracting is very beneficial for politicians who \"want to \r\ndo things without transparency\". Chac\u00f3n says that the fact that the contracts \r\nthemselves determine the contracting processes (and how they will be regulated) \r\ncreates a vacuum to supervise. Transparency loses under these \r\nconditions.<\/p>\n\n\r\n\n

<\/p>\n\n\n

\"Small Print\" of Big Business in Venezuela<\/h2>\n\n\n

On \r\nJuly 30, 2009, CREC, one of the companies of holding China Railway Construction \r\nCorporation (CRCC), signed a contract with the State Railways Institution (IFE) \r\nfor 7.5 million dollars for the construction of the railway system \"eje \r\nnorte-llanero<\/I> (north-plain axis), Tinaco-Anaco stretch, under the \r\nturnkey-total amount closed modality.\" Hugo Ch\u00e1vez had authorized the hiring of \r\nthat company in the 073-2009 \"report\" of March 3, 2009, based in turn on the \r\nagreement of economic and technical cooperation signed by both Governments on \r\nSeptember 24, 2008, in Beijing.<\/p>\n\n\r\n\n

\"Have \r\ncredit with the second largest economy in the world, which is a great guarantee \r\nfor us. In addition, the important thing is how those resources have been \r\nallocated,\" presumed in 2011 Jorge Giordani, then Minister of Planning and \r\neconomic mentor of Ch\u00e1vez. But today the train is an unfinished project. Despite \r\nthe millionaire outlay \u2014the figure today represents 70% of Venezuela's \r\ninternational reserves and exceeds the cost of the recent expansion of the \r\nPanama Canal\u2014, the work that would allow the train trip between the center and \r\nthe east of Venezuela at 220 kilometers per hour is in ruins. According to the \r\ncontract, CREC had to complete it in \"40 continuous months from the signing of \r\nthe initial instrument.\"<\/p>\n\n\n\t\t\t\t

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