Argentina and the BRI: A Compelling or Concerning Partnership?
In February of 2022, Argentina became a member of China’s “Belt and Road Initiative” (BRI): a massive infrastructure project to increase Chinese investment and development projects throughout the globe, especially in East Asia, Europe, and Latin America. The BRI was launched in 2013 by President Xi Jinping and its name alludes to China’s first silk road which also served as an extensive trade and Western expansion effort by the country throughout the Han Dynasty. China has proven itself to be a leader in energy transition efforts towards renewable energy and critical minerals. The country is the largest supplier and financier of solar and wind equipment and projects in Latin American countries, and the largest producer of lithium-ion batteries in the world– dominating the industry at a production rate of 63 percent.
From an environmental perspective, Argentina was highly incentivized to join the BRI to maintain its energy security and develop its own efforts toward transitioning to clean and renewable energy. The country has already witnessed the environmental benefits of joining the BRI as China has assisted in constructing Argentina’s fourth nuclear power plant. Furthermore, Argentina has experienced a severe financial crisis throughout the past couple of decades. With China’s economic assistance, “the ratio between Argentina’s GDP and external debt stocks has increased from less than 30 percent to over 65 percent.” It’s apparent that the country has recognized the financial upsides of participating in China’s project after it opened the doors to financial assistance, debt renegotiations with the International Monetary Fund, and potential economic growth for the country as a whole.
However, the BRI continues to raise significant concerns for other world powers including the United States. To the U.S., the BRI is a discouraging symbol of China’s political, economic, and global impact. Many world leaders warn that the BRI could also be utilized as a way for China to secure military power over participating countries as well. While the U.S. and Argentina have previously maintained bilateral relations and strong trading partnerships, the BRI has subsequently strained the relationship between the two countries. Andrew Charsky and James McBride at the Council on Foreign Relations noted that “For Washington, Buenos Aires is a key partner for regional peace, democratic stability, and human rights promotion in the Americas, while the United States is a major source of foreign direct investment and sponsor of international cooperation programs in Argentina.” Therefore, the U.S. risks losing a major diplomatic partner because of Argentina’s decision to ally itself with one of the U.S.’s largest global competitors.
By joining the BRI, Argentina has also engaged in communication with the Russian government because both China and Russia continue to possess close economic and political ties. “Russia, for now, is willing to see its Eurasian Economic Union overlap with the BRI. Russia does not have the means to be a significant global funder, and it needs foreign investment itself,” says Daniel Yergin, author of The New Map: Energy, Climate, and The Clash of Nations. “And, of course, this fits with its pivot to the east and alignment with China on the issue of ‘absolute sovereignty.’” Skeptics have also shed light on the dangers of becoming dependent on Chinese funds and utilizing such economic incentives as an “easy way out” of its national debt, claiming that countries such as Argentina will lose their political and economic autonomy.
Thus, begs the question, was Argentina’s decision beneficial, and for whom? It may become clear that the U.S. is more focused on what it may lose and not what Argentina may gain. The U.S. appears to view the BRI as more of a threat to national security, as well as an attempt by China and potentially Russia to uproot the U.S. as a global superpower and drive a wedge between the country and its Latin American allies. In all actuality, it may simply be the world’s next massive globalization effort.
The decision signified that in this current day and age, China offers more on an economic, political, and environmental scale, to several developing Latin American countries despite the United States’ foreign direct investment. As of March 2022, additional countries have followed in Argentina’s footsteps, and the BRI’s membership numbers have risen to 147, with 20 of those countries residing in Latin America and the Caribbean. While they should remain aware of the potential risks the BRI poses to its autonomy and national security, the benefits of the initiative seemingly outweigh its costs. As it stands, Argentina’s decision to join the BRI, at least currently, was effective for the nation overall.
The BRI has proven to provide developing countries with a highly appealing opportunity to alleviate a portion of their national debt, advance their economies, and take several significant steps toward national energy transitions. Whether or not this will remain the case in the future remains uncertain, but Argentina’s decision ultimately serves as another example of China’s ever-expanding global influence.
Photo Credit: Global Times, VCG