MercoPress. South Atlantic News Agency

It's official: Tierra del Fuego planning a multipurpose port in Rio Grande

Shaanxi Chemical Industry and Tierra del Fuego Peronist governor Gustavo Melella in August last year signed an MoU which has been kept mostly secret

Argentina's general elections next October are focusing mainly on inflation (150% this year, cost of living and food prices), plus security and street violence, but for those a bit better off and with time to think a semi-hidden issue, plus the overall influence of China in the country.

The construction of a chemical pole supposedly for the agriculture industry, plus a multipurpose port in the city of Rio Grande, Tierra del Fuego province, have emerged in the political scenario.

The issue was uncovered by Argentine investigative reporters and the script or plot is coming to light, with ample media coverage and demands from the opposition. The Memorandum of Understanding signed by the Chinese company Shaanxi Chemical Industry Group and willing to invest some US$ 1.2 billion, with Tierra del Fuego Peronist governor Gustavo Melella in August last year was kept mostly secret, until ratified by the provincial executive last December. Under the clauses of the MoU, Shaanxi is expected to set up a plant to produce 900.000 tons of urea, 600,000 of synthetic ammonia and 100,000 of weed killer Glifosate, plus the multipurpose port in the most populated city of Tierra del Fuego, Rio Grande. The port has been an old demand from the city for decades both from the provincial and federal governments, thus the significant interest for the investment from public opinion.

This has opened eyes and ears of those who feel Argentina is far too committed with China. To start with is the alleged satellite tracking station in Neuquen province, with Chinese military and civilian personnel and to which Argentines are rarely allowed to visit. Officially the station is run by China's National Space Administration together with their Argentine counterparts. In Santa Cruz province Chinese companies are building two dams, of which one already has been named after Cristina Fernandez late husband, the deceased president Nestor Kirchner; likewise Chinese companies, equipments and personnel are involved in the upgrading of much of Argentina's railways and the Buenos Aires metro; Argentina and China central banks have a currency swap agreement of several billion Yuans which enables Argentina to comply with international reserves agreements and part of it to finance Chinese imports; China has shown strong interest in building Atucha Tres, Argentina's fourth atomic power generating plant and also dredging the Parana/Paraguay waterway which is in the rich agricultural heartland of South America and concentrates in the port of Rosario much of the Argentine grains and oilseed shipments, as well as production from Paraguay and some shipments from Brazil. The Chinese are also involved in Argentine banking, mining and the rumors of a strategic port or base in Tierra del Fuego have been persistent.

Looking back in time, forty one years ago special forces from the British Task Force planned to secretly land and put an end to the efficient aircraft and professional pilots from the Argentine Air Force by attacking the Rio Grande military base. Adverse climate conditions and incomplete charts forced the mission to be aborted, with some of the choppers involved unexpectedly crash landing in Chilean territory.

Now that Governor Melella was re-elected by an ample margin and enjoys a coalition with opposition parties that support him, he has admitted the existence of the MoU, and has recently sent its terms to the friendly provincial legislative, although many details of the document continue unrevealed. Back in the nineties during the time of President Carlos Menem, as part of his privatization policy of Argentine government companies, his administration also authorized provincial governments to autonomic promotion of foreign investment in their jurisdictions, and this is what Melella allegedly is doing.

Opposition and concerned Argentines point out that a strategic Chinese port in Rio Grande could easily control the passage of vessels between the two oceans through the Magellan Strait; have direct access to Antarctica; control over Falkland Islands movements particularly the NATO/British Mount Pleasant Complex and act as a port for supplying the massive Chinese fishing fleet which every season pops up in mile 201 of the South Atlantic. A port of this strategic value can only be in the hands of the Argentine government they argue.

However negotiations with the Argentines are not easy, and in the same patch of land where the Chinese are planning their plant and multipurpose port, there is also an Argentine company with local investors, Mirgor, allegedly, also interested and with supporters in the provincial legislative, Besides this is not the first time China has shown an interest in Rio Grande, back in 2009 a similar scheme under the name of Tierra del Fuego Energia y Quimica S.A. also insisted in developing a chemical pole and a multipurpose port. The idea was that the province of Tierra del Fuego would supply 430,000 cubic meters of natural gas during 25 years. But at the time Argentine Attorney General, following on complaints from the political opposition ruled that the province had that natural gas capacity but only for 12 years. The deal finally fell through but the new company Shaanxi Chemical is demanding that the province reimburse the US$ 30 million invested in the similar project back in 2009 by the previous company. Comments at the time were that it had all been a “Chinese hoax”. In Spanish it is common to say when referring to large projects, deals, gifts, it is all a 'Chinese joke'. An expression which is century old and quite common when Latin American delegations travel to China be it for financing or economic support, and return empty handed..

Opponents of the Chinese growing presence in Argentina also underline that no matter how deep, behind all major Chinese companies is Beijing and its global policy. An example is Beijing's global ports policy. Since 2010 according to The Economist, China has spent 20 billion dollars in port terminals. Such is the case of Sri Lanka's main port now under total Beijing domain given payment for a heavy interests loan to the country. Africa is another area where China has great influence in shipping routes through the control of at least sixty ports, also extensive to fishing areas.

Penetrating Europe has not been that easy but not impossible, despite EU and US objections. In effect recently Cosco managed to take over 24,9% of the port of Hamburg and in Greece following the 2008/09 chaotic situation, Cosco now controls completely the port of Piraeus, strategic for China/EU trade.

In Latin America the trend has been slower but anyhow two significant projects outstand. From scratch the port of Chancay in Peru, is to become a Pacific hub with a 3,000 million dollars investment also from Cosco, and on the Atlantic, Paranaguá in Brazil scheduled to become one of the largest ports of the country. In Tierra del Fuego the government insists it is only interested in the chemical pole and trying to convince the Chinese to desist from the multipurpose port. With Argentina under such economic and financial duress it is hard to imagine this happening, whatever the outcome has naturally rattled US interests in the area, but that is a different ballgame.