Just days before former US President Donald Trump left office, in early January, Ecuador signed a deal with the US International Development Finance Corporation (“DFC”) for financial assistance to repay its billions of debt held by China.
As part of the deal, Ecuador committed to exclude Chinese companies from its telecom network. In this context, Ecuador signed up to Clean Network, a US State Department initiative which sets guidelines for the implementation of digital standards for the use of technologies and services from China in telecommunications, de facto banning them.
The Clean Network initiative is expected to continue under President Biden’s administration. Despite opting for a 180-degree foreign policy change based upon multilateralism, our sources believe that President’s Biden’s strategy on China will not differ greatly from Trump’s aggressive approach, albeit with a bit more polish. President Biden will push forward those policies implemented by the Trump Administration aimed at curtailing the power and influence of Chinese tech companies in the Americas.
In an effort to play down the framework agreement, the Ecuadorian Minister of Economy explained that there were no restrictions or alleged conditions for the future relationship between Ecuador and China. “Here all those who want and can participate (in the concession of assets) are welcome.”
In line with this statement, Chinese representatives have assured that the conversation between Huwai and Corporación Nacional de Telecomunicación (“CNT”) and other operators continues to flow smoothly. Our source at Huawei remains confident, “We’ve been here for 19 years and there has never been a problem with us. Now we’re waiting for the government to define its 5G spectrum to continue our cooperation.”
“We’ve been here for 19 years and there has never been a problem with us. Now we’re waiting for the government to define its 5G spectrum to continue our cooperation.”
Executive, Huawei, Latin America
Regardless, Ecuador’s deal with DFC could be broken by Quito if Andrés Arauz, the leftwing presidential candidate, wins the forthcoming 11 April 2021 presidential elections. Arauz has the backing of the former president Rafael Correa, who aligned Quito with Beijing during his time in office. Arauz won the first round of the Ecuadorean elections last February with a 37.27% of the vote. He was followed by Guillermo Lasso, a conservative businessman who obtained 19.74% of the vote.
A political analyst in Quito predicted very different outcomes depending on the results of the election, “Lasso has publicly stated that he wants to shift Ecuador closer to the US. Arauz, under Correa’s guidance, appears to favour increased engagement with China. Both will be hoping that they aren’t forced into choosing one or the other.”
“Lasso has publicly stated that he wants to shift Ecuador closer to the US. Arauz, under Correa’s guidance, appears to favour increased engagement with China.”
Political analysts, Ecuador
In the Americas, only the Dominican Republic and Brazil have so far signed the Clean Network initiative. Nonetheless, Brazil has significantly toned down its anti-China rhetoric following dramatic negotiations to obtain CoronaVac shipments. Notably, Brazil is yet to define the tender requirements to build 5G infrastructure in the country, in what currently is the biggest point of tension between the US and China in the region due to the still uncertain participation of Huawei.