Ecuador election influenced by U.S.-China friction

The announcement of a USD 3.5 billion credit line to help Ecuador pay off its debt to China hinted toward a confrontational approach of the recently formed U.S. International Development Finance Corporation (DFC) to Chinese finance in Latin America. While foreign policy is admittedly low among voter concerns ahead of Ecuador’s presidential elections on Sunday, the DFC loan puts the leading candidates’ choice of partner in even sharper focus, with the country in need of international support to recover from the pandemic.

Signed by outgoing President Lenin Moreno, the DFC loan is conditioned to Ecuador excluding Chinese technology from its telecoms sector. DFC CEO Adam Boehler said the agreement will allow Ecuador to “refinance predatory Chinese debt” and help it improve the value of its strategic assets.

However, according to Paulina Garzón, director of the China-Latin America Sustainable Investments initiative, by using its financial muscle to support foreign policy goals, the DFC’s actions are similar to those of Ecuador’s other major creditors: the China Development Bank and the Export-Import Bank of China.

“The loan is clearly intended to strike at Ecuador’s relationship with China,” Ms. Garzón said, in a phone interview. “I think it is ill-advised. It has amplified the debate about which power Ecuador aligns with. When it is scrutinized, I think it will be rejected by the public.”

Leading the polls ahead of Sunday’s vote are left-wing, China-friendly candidate Andrés Arauz, and Washington-allied conservative banker Guillermo Lasso — a supporter of Mr. Moreno’s 2019 International Monetary Fund-backed...