Photo: Wikimedia Commons.
The decision to halt a billion-dollar project to construct two Chinese funded dams in the province of Santa Cruz in Argentina, has sparked tensions in the bilateral relations between the two countries. The project’s suspension has led to the dismissal of approximately 1800 employees due to lack of funds and contractual issues.
The situation has elicited various reactions from Argentine authorities. Presidential spokesperson Manuel Adorni said in a press conference on Tuesday: “I don’t understand why that would affect the relationship with China,” and added: “We see no risk of the relationship regressing or changing.”
The project, led by Chinese company Gezhouba, was paused in November 2023 due to funding shortages, despite efforts by contractor UTE Represas Patagonia, composed by Gezhouba, Eling Energía, and Hidrocuyo, to maintain continuity of the works. The Argentine government, led by Javier Milei, decided not to finance further public works with state funds, further complicating the situation.
Gezhouba’s departure from the country and the announcement of the total suspension of the project could trigger reprisals from China. The breach of the dam contract includes cross-clauses with other projects, such as the pending swap and the modernization of the Belgrano Cargas railway, also financed by China. This could result in debts exceeding US $30 billion, representing a significant challenge for the Argentine economy.
Milei’s geopolitical stance, characterized by alignment with former US President Donald Trump, has further complicated the situation. China, as Argentina’s second-largest trading partner, plays a crucial role in the country’s economy, which could exacerbate the consequences of this decision.
If tension escalates to debt collection, Argentina could face the possibility of losing access to the Chinese market for key products such as soy and meat. This conflict represents a significant challenge for both the bilateral relations between Argentina and China and the South American country’s economy.
The repercussions of this suspension extend beyond economic aspects and underscore the importance of careful handling of international affairs. The lack of a swift and satisfactory resolution could lead to even graver consequences for both parties, affecting not only the economic sphere but also international relations in Argentina.
Main source:
La parálisis de represas en Argentina “no afecta” vínculo con China, según el Ejecutivo | Infobae (2024, marzo 19). https://www.infobae.com/america/agencias/2024/03/19/la-paralisis-de-represas-en-argentina-no-afecta-vinculo-con-china-segun-el-ejecutivo/
Other related sources:
Primera represalia de China contra Milei: paralizó la obra de las represas y echan a todos los trabajadores | La Política Online (2024, Marzo 13). https://www.lapoliticaonline.com/energia/como-argentina-no-cumplio-con-el-contrato-china-se-desliga-de-las-represas-y-puede-llevar-al-pais-a-la-quiebra/