Latin America should avoid exchanging Odebrecht for Chinese companies, says IDB head

The president of the IDB (Inter-American Development Bank), the American Mauricio Claver-Carone, criticized the presence of Chinese enterprises in Latin America.

The problem would be for the region to exchange “the era of Odebrecht for the era of Chinese companies”, said Claver-Carone.

The Brazilian construction company was at the center of political scandals involving the payment of bribes to politicians in Brazil and other countries in the region.

“Chinese companies misrepresent the markets. Why? Because they are state-subsidized companies and, frankly, they are companies without standards of integrity,” said the IDB president.

According to Claver-Carone, the concern is how these companies affect “an ecosystem that already has many problems, bureaucratic, corruption, transparency, etc. It’s like a perfect storm.”

Over the past 20 years, China has gained ground against the United States in the Americas, becoming the main trading partner of almost all South American countries, granting low interest credits and investing in infrastructure projects such as transmission and energy production , ports and roads.

China accounts for 12% of exports and 18% of imports across the entire Latin American and Caribbean region, according to a report by Paris-based think tank BSI Economics. Between 2004 and 2019, the region’s exports and imports from China increased tenfold and eightfold, respectively, according to the same source.

Although the IDB is headquartered in Washington, Claver-Carone became, a year ago, the first American in charge of the institution, one of the largest regional development banks in the world, after having its name proposed by the Donald Trump administration.

Born in Miami and with Cuban roots, he says he is not against the presence of Chinese companies in Latin America, but calls for this to be done “under a transparent framework and in a field of equal dispute for all”.

As the region’s main financial partner, the IDB seeks investments that can generate sustainable, inclusive and long-term growth, he says. “And the best companies to do it are the American, European, Japanese, Korean, etc,” he defends.

Claver-Carone points out that, in the past, some of the companies in these countries may even have ignored these criteria in Latin America, but he says that the business world has evolved a lot and, currently, it has other standards.

The IDB president also attributes part of the blame for the supply problem that affects world trade to the fact that a large part of production is based in China, and believes that it is necessary to decentralize industry, which could benefit Latin America.

In this sense, according to Claver-Carone, if Latin American and Caribbean countries were responsible for 10% of Chinese exports to the United States of those same products that they also export to the North American nation, the region would receive US$ 72 billion additional, an amount that it classified as transforming.

In addition, the IDB president demanded that his institution be endowed with greater financing capacity. Once he took office a year ago, Claver-Carone set a goal of increasing that capacity from $11 billion to $23 billion annually.

“We are not going to be able to fulfill tomorrow’s missions with yesterday’s resources. That is why it is necessary to strengthen” the IDB, he defended.