The domestic risk of chinese partnerships: cross-conditionality and coalition building

Resumen

Chinese credits became a viable, and preferred, alternative during the pink tide in part because it lacked traditional conditionality clauses. However, these financial operations, as well as others, often imply the existence of cross-conditionality. In opposition to traditional variants of conditionality, cross-conditionality implies that operations in the realms of trade, finance, or aid for development can be jeopardized as a response to decisions taken by national authorities that change previously agreed conditions in parallel projects. The main objective of this study is to explore the possible consequences of cross-conditionality, particularly the political consequences, in the realm of Latin American domestic affairs. The hypothesis is that cross-conditionality represents a similar risk than the one that traditional conditionality represented in terms of national autonomy insofar as national governments would still have their hands tied, although for different reasons. We find that cross-conditionality affects the coalition-building efforts of national governments since it can be used to affect key government partners. In Brazil, agribusiness, a key partner of the current government, is the sector that could be potentially affected if the Chinese government decides to implement cross-conditionality as a retaliatory measure to hostile policies or declarations of the Brazilian government vis-à-vis Chinese interests.