Four months have passed since an earthquake that left a large part of the Ecuadorian coast in devastation. On August 15th Ecuador received what was called, “transference of materials and equipment” as part of the free military assistance agreement between China and Ecuador signed in 2014. Among donations, there were tents, mattresses, and what mainstream media is calling “military equipment to support mitigation efforts”, and support to “maximize the capacity of the armed forces”.
Exhibition of Chinese donation
According to FEMA, (Federal Emergency Management Agency), mitigation is defined as “an effort to reduce the loss of life and property, reducing the impact of disasters”. Regardless, the military equipment donated by China consists of 10,000 modern AK47 rifles, describes as being lighter and more effective. This donation of weapons is just one of numerous Chinese investments in Ecuador over the course of several years.
Chinese ambassador to Ecuador Wang Yulin
In April, the Chinese Development Bank (CDB) granted the Ecuadorian government a 5.3 billion dollar credit line. Being that Ecuador is the smallest member of OPEC (Organization of the Petroleum Exporting Countries), the Chinese aid came exactly at a time of economic difficulty in Ecuador due to the global plunge in oil prices. One month before accessing the credit, Petroecuador signed a crude oil sales contract with Petrochina. In regards to the loan, Petroecuador confirmed that the commercial contract was signed on January 22nd, 2016 between the Ecuadorian Public Hydrocarbons Enterprise, EP Petroecuador, and Petrochina International Company Limited for the purchase and sale of crude oil from eastern Ecuador.
In addition to the recent aid from the Chinese government, Ecuador also accepted financing from the private Chinese bank, Eximbank, which specializes in investments in oil and hydroelectric sectors. Eximbank promises to finance a 509 million dollar project to develop an electric transmission system at Coca Codo Sinclair, the largest hydroelectric plant in Ecuador. Chinese aid to Ecuador goes further back than just 2016; In 2014 China Andes Petroleum, formed by Sinopec and CNPC (China Petroleum & China National Petroleum Corporation) signed a contract with the Ecuadorian government which granted the Chinese companies two blocks of oil in indigenous Kichwa Sarayaku and Sápara territories in the Ecuadorian jungle.
According to the Ecuadorian ministry the access to Chinese credit is part of the strategic relationship maintained with China, which has allowed Ecuador to access financing and China to purchase national oil during the past few years. The Chinese donation of weapons during the aftermath of the earthquake represents yet another chapter in the long history of credit loans, financing, and investments in the oil sector between China and Ecuador.