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LatinNews Daily - 15 January 2021

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In brief: Ecuador sidelines China with US debt deal

* Ecuador’s President Lenín Moreno has announced the signing of an agreement with the US government’s International Development Finance Corporation (DFC) “for the delivery of up to US$3.5bn, which will be used to pre-pay expensive debt, and to reactivate [Ecuador’s] economy”. DFC chief executive, Adam Boehler, described the deal as “a novel approach that very strongly combines both missions of the DFC”, claiming that it will both “impact development in Ecuador in a very positive way”, and ensure that “no single authoritarian country has undue influence over another country” – a clear reference to geopolitical rival China, to which Ecuador is substantially in debt. The agreement appears to be an attempt to reduce Chinese economic influence in Ecuador, allowing the Moreno administration to refinance its debt on more favourable terms (at a 2.48% interest rate, and through the concessioning of oil, telecommunications, and hydroelectric sectors to US-based companies), in exchange for undermining China’s significant interest in gaining traction in these sectors. Ecuador’s economy & finance minister, Mauricio Pozo, insisted that there is no geopolitical significance to this agreement, but it is unlikely to be well-received in Beijing, and could prove similarly controversially domestically, less than a month before Ecuador holds a general election to choose Moreno’s successor.