The message from the Trump administration to Latin America has been blunt: Governments should disengage from China to escape its “predatory lending” and “debt-trap diplomacy.” Those that fail to do so invite debt crises and a cold shoulder from Washington.
The White House has been unclear about the alternatives to Chinese infrastructure financing in the region, which totals $141 billion since 2005. But belatedly and parsimoniously, the United States has begun to ramp up its own lending in Latin America.
Since last year, for example, the Overseas Private Investment Corporation has approved $1.4 billion in loans to the region. It has also expanded its footprint through the Northern Triangle Initiative—created to improve infrastructure and create economic opportunities in El Salvador, Guatemala and Honduras—and the 2X Americas Initiative, to promote women’s economic empowerment.
It has also demonstrated a willingness to punish Latin American governments for deepening ties to Beijing. Last September, the U.S. recalled its top diplomats from the Dominican Republic, El Salvador and Panama after they severed ties with Taiwan.
Though the fight for influence in Latin America will be long, the Trump administration’s initial efforts are ripe for examination. In at least one major battleground—Argentina—the U.S. is failing to divide China and Latin America.
According to the ArgentinaPulse survey, conducted by the Wilson Center and Poliarquía, 80 percent of Argentines favor Chinese investment. Seventy-six percent of Argentines express a positive view of China.
This is surely unwelcome news for President Donald Trump, who probably viewed Argentina as an easy American ally south of the border.
China made serious inroads under Argentina’s last president, the leftist Cristina Fernández de Kirchner. During her eight years in office, China approved over $15 billion in loans to the country, including high-profile projects such as the renovation of the Belgrano Railway and two hydroelectric dams in Patagonia. In return, Fernández de Kirchner approved construction, by the Chinese military, of a controversial space station in Argentina’s remote Neuquén province.
But the election of Mauricio Macri in late 2015 brought about a re–evaluation of Argentina’s international relations—and appeared to offer an opportunity to elbow out China from South America’s second-largest economy. After all, Macri had expressed skepticism about his predecessor’s economic dealings with Beijing, which he criticized as nontransparent and potentially wasteful.
As it turns out, Argentina did pivot toward the United States, but barely inched away from China. Burdened with vast infrastructure needs, a large budget deficit and scant U.S. lending, Macri eagerly welcomed Chinese support. Under his center-right government, the China Development Bank and the Export-Import Bank of China have continued to provide financing, including for a massive solar farm, in Jujuy province, and for San Martín Railway improvements. Last year, amid economic turmoil in Argentina, China’s central bank nearly doubled its line of credit to Buenos Aires, to $19 billion.
In December, when Argentina hosted the G-20 leaders’ summit, Macri made sure his first meeting was with President Donald Trump in the Casa Rosada presidential palace. But following the summit, he hosted President Xi Jinping for a state visit, and the two signed 30 agricultural and investment deals, totaling over $5 billion.
When Trump’s spokeswoman said the two presidents had discussed “predatory Chinese economic activity,” Argentina’s foreign minister personally disavowed the White House description of the meeting.
Meanwhile, it is not only the Argentine government—the most pro-American in recent memory—that has opted to deepen ties between both the United States and China. As the ArgentinaPulse survey shows, the Argentine people are similarly unconvinced by the warnings from Washington.
Only 32 percent of Argentines believe the country must choose between the United States and China. Among those who foresee an eventual split with one of the planet’s two biggest powers, 54 percent would prefer Argentina prioritize its relationship with China.
For the United States, meanwhile, this might be as good as it gets.
In October, Argentines will vote in a presidential election that could bring Fernández de Kirchner back to power, this time as vice president. Should her running mate, Alberto Fernández, win the presidency, she would bring with her not only admiration for Beijing and a legendary appetite for Chinese loans, but also a history of rocky ties with Washington.
Benjamin Gedan is the Deputy Director of the Latin American Program at the Wilson Center, and the Director of its Argentina Project. He is a former South America director on the National Security Council at the White House under the Obama administration.
Emma Sarfity is a researcher at the Wilson Center’s Latin American Program’s Argentina Project.