Negotiating with China is “worse than the IMF,” Ecuadorean President Rafael Correa said on Saturday after rejecting China’s conditions for a US$1.7 billion loan to build a hydroelectric plant.
In his weekly report on government activities, Correa said some of the conditions China’s Eximbank required for the loan were “really a threat against our sovereignty.”
“All of a sudden, negotiating with China is worse than the IMF,” he said.
The leftist leader’s comments came after both countries signed US$4.7 billion in cooperation agreements last month during a visit to the country by Jia Qinglin (賈慶林), chairman of the National Committee of the Chinese People’s Political Consultative Conference.
The loan Correa railed about concerned an agreement with China’s Sinohydro company to build a US$1.97 billion hydroelectric plant in Ecuador, for which he is seeking 85 percent financing from Eximbank.
Correa had already complained on Tuesday about Eximbank’s demand that Ecuador’s central bank “put its assets up as collateral” for the loan, which he deemed “outrageous.”
If Eximbank did not change its loan conditions, he warned that Ecuador would rethink its China policy.
On Thursday, Finance Minister Elsa Viteri said negotiations on the hydroelectric plant were continuing and that she had forwarded Eximbank the loan conditions Ecuador was willing to accept for the loan.
Correa earlier this year complained about the stringent conditions the IMF imposed in exchange for loans, and called for a regional Latin American monetary system in order to “become the owners of our own destinies.”
The cooperation agreements signed last week included a US$1.4 million donation and two lines of credit: one for US$2.9 million payable within 10 years and another for US$438 million to buy four Chinese military planes for Ecuador’s air force.
The two countries also signed a joint oil exploration venture in Ecuador’s eastern Pastaza province.
Beijing’s direct investment in Ecuador has reached US$2.2 billion, making it one of the top targets of Chinese investment in Latin America, Jia told reporters at the close of his visit.
Trade between the two countries reached US$2.4 billion last year, a 50 percent increase from the previous year, he said.
In related news, oil companies operating in Ecuador have until March to sign new contracts or the government will “change the rules of the game” to give the state more control over the sector, Correa said on Saturday.
The socialist leader was first elected in 2006 on promises of helping the poor and taking a tough stance with international investors who he accuses of pillaging the country’s wealth.
Correa’s rhetoric has toughened as the negotiation of contracts approaches. But he apparently does not want to go so far as to choke off the private investment that his OPEC-member country needs to bolster its key oil sector.
“Either they sign the new contracts by March or we are going to change the rules of the game and the relationship between the companies and the state,” Correa said during a televised town hall meeting.
“I will meet with the companies and we are going to speak plainly. They will invest or leave the country,” he said.
Private firms — such as Spain’s Repsol, Brazil’s Petrobras and Italy’s Eni — are expected by the government to produce 195,342 barrels of oil per day next year, down from 201,369 barrels per day this year.
Correa wants them to give up their profit-sharing deals and sign new contracts that would make them service providers.
His relationship with the private sector hit a low point last year when Correa refused to honor US$3.2 billion in global bonds, even though the government had the money to pay. Investment has also been slowed by the world financial crisis.
The president sides with indigenous groups that have brought a US$27 billion environmental damages lawsuit against US petroleum company Chevron Corp, which no longer has operations in the Andean country.
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