Informe Resiliencia - English version

Building Democratic Resilience:

Argentina and Chile In the Face of Foreign Authoritarian Influence of China, Russia and Iran

Program Staff

Santiago Fraga Program Manager

Alejandro Bongiovanni Senior Advisor

Marcos Falcone Program Associate

Luciana Caccianini MEL Officer

María Marta Vargas Research Consultant

Lucas Delgado Press and Communication Consultant

María Ángeles Dezan Research Assistant

Fundación Libertad would like to extend its gratitude to the International Republican Institute (IRI) for its support to the program.

Copyright © 2023 Fundación Libertad. All rights reserved.

Cover illustration: © María Fraga Alonso.

The material included in this publication may be partially and totally reproduced, as long as the source and author are cited. © Fundación Libertad, April 2023. Building Democratic Resilience: Argentina and Chile in the face of foreign authoritarian influence of China, Russia and Iran. Argentina.

The Project

The “Building Democratic Resilience” project, implemented between December and April 2023 by Fundación Libertad of Argentina and supported by the International Republican Institute (IRI) had the goal of countering foreign authoritarian influence. To collect evidence and expose the actions of China, Russia and Iran in Argentina and Chile, our team conducted research with the help of primary and secondary sources. The most significant achievement of that stage is that we managed to interview 45 leaders and experts whose insights were key to our analyses and recommendations. These included public officials, members of Congress, businesspeople, NGO representatives and university researchers from Argentina and Chile, among others, but also from the rest of the Americas and Europe.

This research, which was completed by early March, was used in multiple ways. First, it was incorporated into a report that was published in March of 2023 by Fundación Libertad which exposed more than 20 controversial cases of foreign authoritarian influence which were economically and democratically detrimental to Argentina and Chile. Second, it served as the basis for a series of five videos that we created to spread the project’s message on social media platforms as well as in the media. Third, the publication of the report was an opportunity to start a public conversation on foreign authoritarian influence in a seminar.

Indeed, the final part of the project was marked by the regional seminar that was held on March 27 and 28 at the City Council of Buenos Aires. Besides having several of the previously interviewed experts speak at the event, we invited former and current public officials from other Latin American countries to discuss the topic, among them former Mexican President Felipe Calderón, former Chilean President Sebastián Piñera, former Bolivian President Hugo Quiroga, Brazilian Senator Sergio Moro and the Spanish MP Cayetana Álvarez de Toledo. The two-day seminar brought over 300 local actors, including businesspeople, politicians, researchers, journalists and NGO representatives, and were featured extensively in the media.

The Pre and Post Test Seminar Analysis and the interaction in media and social media reflects the impact of the activities. According to the results, the Seminar managed to increase the awareness and the knowledge of the actions and agreements of the non-democratic governments of Chi-

na, Russia and Iran with the democratic governments of Chile and Argentina. The 104 articles published in 75 national and subnational media had an estimated audience of at least 2 million people.

A report summary is provided below. To find more information about the project, visit the website: https://libertad.org.ar/influencia-autoritaria/.

Executive Summary

This study exposes the activities of the non-democratic governments of China, Russia, and Iran in Argentina and Chile, analyzes some of the most controversial cases, and describes their economic, political and cultural effects in both countries. This document also explains how the fragile economic situation in Latin American countries is purposefully used to seek, and in many cases reach, agreements which imply negative political and economic concessions in the long term.

The initial section introduces the topic of foreign authoritarian influence on the part of China, Russia, and Iran as well as its recent growth, particularly in Latin America. The research methods involve data analysis and 45 interviews to experts and stakeholders.

A second section presents and analyzes three types of actions that China, Russia and Iran perform in Argentina and Chile: economic, institutional, and ideological. This section places particular emphasis on controversial cases like copper agreements between Chile and China, which are said to have caused losses of up to 7 billion dollars for the Chilean state; a Chinese investment in Argentina for building a nuclear power plant with untested technology; the increase of Russian and Iranian propaganda in the media of both countries, among others.

Finally, the concluding section presents a series of recommendations to strengthen democratic resilience against the potential dangers that Argentina and Chile face. These include raising awareness of the risks of conducting business with authoritarian regimes; privileging relationships with liberal democracies; improving control mechanisms for all international agreements; and, in the case of Argentina, clarifying its foreign policy.

The most controversial cases of authoritarian influence of China, Iran and Russia in Chile and Argentina INVESTMENT AND TRADE

RULE OF LAW

NARRATIVE AND PROPAGANDA

1. Economically dependent countries

China represents 39% of exports and 30% of imports from Chile, as well as 9% and 22% from Argentina. In the energy sector, Chinese investments are equivalent to 54% in Chile and 75% in Argentina.

2. Conditional contracts

In Argentina, the contracts with China are intertwined: the Belgrano Cargas train, the hydroelectric complex in Santa Cruz and a currency swap for 11 billion dollars. Difficulties in one project may cause China to withdraw from another.

3. Economic losses due to preferential prices

Losses of seven billion dollars were calculated between 2006 and 2016 for the Chilean State, due to an agreement that set a preferential sale price for copper between the National Copper Corporation (Codelco) of Chile and the Chinese state company Minmetals Corporation.

4. Unprecedented nuclear technology

In 2022, the Argentine state company NASA and the China National Nuclear Corporation signed a contract for the construction of a nuclear power plant (Atucha III). The safety background for this plant and reactor is still unknown, which, although it requires an investment of 8,300 million dollars, could only provide energy in seven years.

5. Vaccine diplomacy

In the context of Covid-19, China and Russia intensified their relationship with Argentina through the sale of vaccines. In the case of Russia, breaches of the contract conditions were verified, with vaccines not delivered within the expected deadlines and defective doses.

6. Chinese ports in the south

China promotes projects for the installation of ports in Patagonia. The project in Corral (Chile) has been canceled due to problems in the use of the coastline, but in the case of Río Grande (Argentina) only public opposition stopped the agreement signed between the state company Shaanxi Chemical Industrial Group and the government of the province of Tierra del Fuego.

7. Natural resources in danger

Illegal fishing by Chinese-flagged vessels on the maritime platforms of Chile and Argentina caused estimated detriment between 1,000 and 2,600 million dollars for Argentina in 2022 and 400 million for Chile in 2016.

8. Judicial investigation: Iranian oil

In 2018, Iran paid a debt to Chile’s National Petroleum Company (ENAP) with a low-quality cargo that poisoned more than a thousand people. An ongoing judicial investigation has found ENAP executives guilty for the contamination.

9. China’s space station in Argentina

In 2015, the Argentine government granted China 200 hectares in the province of Neuquén for 50 years, for the installation of the Far Space Station, controlled by the Chinese People’s Liberation Army. The contract does not specify control mechanisms.

10. The Chilean passports

In 2021, a Chinese-German consortium led by the Chinese state-owned company Aisino and made up of the German Mühlbauer, won a tender to manufacture identity cards and passports for Chilean citizens for ten years. The contest, later annulled, had security implications.

11. The SantiagoValparaiso train

In 2018, a Chinese-Chilean consortium, including China Railways Group Limited, tried to use an old general railway law to obtain a direct concession, instead of following the bidding process, for the construction of a train between Santiago and Valparaíso.

12. Chinese’ police stations in democratic countries

China installed 102 police stations in 53 countries, including Argentina (Buenos Aires) and Chile (Viña del Mar). As a result, 230,000 Chinese citizens have been forced to return home to face legal proceedings through these units, which physically and virtually harass and threaten them and their family members.

13. The growth of Hezbollah in Latin America

In the year 2022, planes from the Venezuelan Emtrasur with Iranian crew landed in Argentina and Chile. In the first case, the plane was found to have belonged to Mahan Air, known as the carrier for the terrorist organization Al Quds. In addition, there is information about Iran’s financing of terrorist activities in the “triple border” shared between Argentina, Brazil and Paraguay.

14. Military cooperation with Russia

In Chile, the National Committee for Economic Cooperation with Latin American Countries (CEPLA) sells intelligence technology that has been reported to be behind the increasing ability of the regimes in Cuba, Venezuela and Nicaragua to intensify political repression.

15. Memorandum of Understanding between Iran and Argentina

In 2013, Iran and Argentina signed a Memorandum of Understanding to investigate the attacks on the Israeli Embassy in Buenos Aires in 1992 and on the Argentine Israeli Mutual Association (AMIA) in 1994. Complaints by the Argentine opposition for cover-up and the controversial death of the prosecutor in charge of the case blocked the agreement. Almost 30 years later, the attacks remain unsolved.

16. The authoritarian message on TV in Spanish

There are three media broadcasts in Spanish in Latin America: the Russian channel RT, the Iranian Hispan-TV and Telesur of Venezuela, founded by Hugo Chávez. The RT and Telesur channels are broadcast privately in Chile and on open television in Argentina.

17. Promotion of non democratic cultures in Universities and Cultural Centers

The Confucius Institutes have offices in three National Public Universities in Argentina; and in Chile, in addition to the Tsinghua University which depends on the Chinese State, the Institute is present in two Private Universities. Iran, for its part, uses mosques and the more than 20 Islamic centers in Latin America as a channel for disseminating its culture.

19. The power of “copy and paste”

Between 2007 and 2016, the Argentine state news agency Télam had collaboration agreements with the Venezuelan Telesur; being Telam an input for the small local media in locations in the inland of the country, which reproduced Russian and Iranian disinformation.

20. The local agents of Iran

Local journalists spread biased and even false information about Iran. The most emblematic cases are Fernando Duclos in Argentina and Pablo Jofre Leal in Chile, one of the columnists for Hispan-TV, Telesur and the Spanish-speaking arm of the pro-Hezbollah Lebanese channel Al-Mayadeen, who is even an advisor to the Chilean government.

18. Advertising space as a tool

Private media in Argentina and Chile publish “news” that come directly from China Media Group or from Xinhua, China’s official news agency. These articles are mixed aesthetically and textually among the local news, making it difficult to distinguish journalistic information from paid content at a glance.

Findings

Of the three analyzed authoritarian regimes, China is the one that exerts the strongest economic influence on Chile and Argentina: in recent years, China has turned into the main trading partner of the former and the second of the latter. Simultaneously, China has published policy papers in 2008 and 2016 where it explicitly presents a plan for expanding its influence. The country seeks to increase its surveillance capabilities in Argentina and Chile through obscure projects like building a space station in the Patagonia area, controlling harbors in Argentina, taking charge of issuing passports in Chile, and even running police stations in both countries. China also seeks to improve its reputation through various actions, which range from actively participating in the media in Argentina and Chile to opening new branches of the Confucius Institute to spread the Chinese language and culture. In this context, neither the Argentine nor the Chilean government have adopted successful strategies to counter these foreign authoritarian actions.

On the other hand, the influence of Russia seems to be lower in both countries. However, Argentina appears to be more vulnerable than Chile as a series of administrations close to Putin have reached agreements with the Russian regime that promote disinformation and authoritarian propaganda through various means such as the RT en Spanish news channel or the Covid-19 vaccination campaign. Despite the dissimilar response from the Argentine and Chilean governments to Russian influence, some of its initiatives (like military cooperation and mining investments) seems to be detained in both countries since the Russia invasion of Ukraine.

Finally, Iran does not seem capable of exerting strong influence in Argentina or Chile through trade or investments. But Iran is still operating in both countries and its activities involve the promotion of islamic terrorism as well as drug-trafficking, among others. The Iranian regime actively distributes its propaganda through its own media and cultural institutions, and also through alliances with other regional authoritarian governments that operate in Argentina and Chile, like Venezuela.

Recommendations

Become aware of the risks of conducting business with authoritarian regimes

The most urgent recommendation for public officials in Argentina and Chile is to become aware of the risks of dealing with foreign authoritarian regimes. More specifically, and because of the extraordinary trading volume, Argentine and Chilean authorities must know that Chinese companies are obliged to collaborate with their government without the checks and balances of liberal democracies.

In general, there is a need to achieve greater awareness among public agents and public opinion about the functioning of an authoritarian country. Countries that are not governed by the rule of law can use non-governmental institutions such as companies or universities for political purposes without the need for any type of parliamentary debate or judicial decision. These countries can even conduct propaganda operations in the local media, like the case of China in Chile descriptive by Alberto Precht 1

In this sense, China, Russia, and Iran are not countries with an independent private sector. Therefore, precautions must be taken at the time of signing any deals with actors from these countries.

Privilege relationships with liberal democracies

A second recommendation derives directly from the first: if authoritarian regimes are relatively less trustworthy than democratic ones when conducting business, Argentina and Chile must privilege relationships with liberal democracies. In democracies based on the rule of law, there are effective control mechanisms (such as an independent judiciary branch) to counter government power. In these countries, companies act more transparently and are subject to stable rules. Furthermore, democratic governments also abide by those rules and do not conduct propaganda operations that spread illiberal values, which are incompatible with the Constitutions of Argentina and Chile. Any foreign policy proposal must take these facts into account.

1 Interview conducted on January 30, 2023 with Alberto Precht, Member of the Directory, International Transparency.

Improve control mechanisms for international agreements

A third recommendation is implementing better control strategies any time that the Argentine and the Chilean governments conduct business with foreign agencies or companies, particularly with those of a non-democratic background. In terms of companies, a screening system that identifies ultimate beneficiaries and filters out foreign investors could be useful as the Fundación para el Progreso of Chile has suggested in the past. Additionally, the public sector should mandate the collecting of information on the origin of funds for trips, research grants, or programs that involve foreign participation. These measures would allow for the discovery of presently undetected foreign authoritarian influence within government and academic circles, among others.

Furthermore, decision-makers in Argentina and Chile must take responsibility for their actions. It is dangerous that state agencies deal with authoritarian regimes under the current incentive schemes, which must change. The consequences of faulty agreements, like that which brought Iranian oil to Chile, must matter for public officials involved. Otherwise, harmful deals will continue to be struck.

As Evan Ellis2 said in an interview in the context of this project, ‘the key is not to cease doing business, but to do it in a way that brings about the best results’. In an increasingly globalized world, it would be senseless that developing countries close their borders to the international division of labor. It is desirable that Argentina and Chile integrate themselves with the rest of the world, a task that the latter in particular is mastering at the moment. But seeking opportunities should not create dependency, and the danger today is that an asymmetrical relationship like that of China and Chile forces the latter to accept conditions that would otherwise never be accepted, as it currently happens in the case of Argentina.

2 Interview conducted on January 27, 2023 with Evan Ellis, U.S. Army War College Strategic Studies Institute Professor.

Formulate a clear foreign policy

One final recommendation, which is particularly directed to Argentine public officials, is the need to formulate a foreign policy, something that experts agree is currently nonexistent or at least ‘not clear’ according to Francisco de Santibañes3. The context is that the foreign policy by the Macri administration, which was closer to the US and generally the West, differed strongly from the policy implemented before and after him by the Kirchner and Fernández administrations, particularly with regards to Russia and Iran. This has led to multiple abrupt changes in Argentina’s international alignments in less than a decade, which is not conducive to the building of stable bilateral relationships nor to the obtainment of the direly needed foreign investment. And given that Argentina, as expert Juan Battaleme4 says, does not have the ‘required antibodies’ to counter foreign authoritarian influence, not defining a clear foreign policy opens the doors to the weakening of democracy in the near future.

3 Interview conducted on January 16, 2023 with Francisco de Santibañes, Vice President of the Argentine Council for International Affairs, Argentina.

4 Interview conducted on January 17, 2023 with Juan Battaleme, Academic Director of the Argentine Council for International Affairs, Argentina.

Authorities

President

Gerardo Bongiovanni

Vice President

Hernán Racciatti

Treasurer

Carina Marchioro

Secretary

Carlos Cristini

Fundación Libertad is a private, non-profit organization that for 35 years has worked in the research and dissemination of public policy issues, in particular in the socioeconomic and business areas, promoting ideas of freedom, republicanism, democracy and the rule of law.

Created in Rosario in 1988 by a group of companies, professionals and intellectuals, Fundación Libertad develops its activity with the support of more than 400 private companies. Its projects include courses, conferences, seminars, research, studies and publications as well as an important presence in the media through columns and its own programs.

The institution integrates recognized international organizations such as the Red Liberal de América Latina and the Fundación Internacional para la Libertad, which presides over the Nobel Mario Vargas Llosa.

En Rosario: Mitre 170, S2000, Rosario, Santa Fe, Argentina Tel. (0341) 410 5000 info@libertad.org.ar

En Ciudad Autónoma de Buenos Aires: Av. Córdoba 637, 2do piso, oficina 202 C1054AAF, Ciudad Autónoma de Buenos Aires, Argentina sedecaba@libertad.org.ar

www.libertad.org.ar