On inauguration day, Chile’s new president inherits a Chinese cable scandal and US threats
The US forced Chile to cancel a Chinese undersea cable. Now the region is asking who gets to decide what infrastructure Latin America builds
The Chilean capital Santiago awoke on Wednesday to a mixture of celebration and tension.
Jose Antonio Kast was elected in November with just over 58 per cent of the vote, defeating the Chilean Communist Party.
Chance to connect a digital bridge to Asia
Jorge Heine was Chile’s ambassador to Beijing when the project was first presented to the Chinese government in January 2016.
He was adamant that the initiative was Chilean in origin, not Chinese, taking the form of a government-to-government memorandum of understanding signed with the vice-president of China’s National Development and Reform Commission.
“This was not a Chinese initiative. It was a Chilean initiative submitted to the Chinese government. Chile could be the ideal digital gateway for China into South America, if we played our cards right,” he said.
For Heine, the cable was a matter of basic commercial logic. The region’s most important trading relationship, he argued, deserved its own infrastructure.
A direct connection to Asia, he argued, was the only arrangement that matched the scale of the commercial relationship the region had already built with China and that no existing infrastructure had yet managed to reflect.
Washington, however, saw it differently.
“They said it was a security thing, that the Chinese would spy on us,” Heine pointed out.
“As if the Chinese had invented electronic spying. Electronic spying goes on all over the world with any cable, with any company.”
US$600m Chilean cable project shelved in 2020
Legislators and telecoms industry officials assumed the original idea had been buried for good. Until now.
According to the Chilean press, Transport and Telecommunications Minister Juan Carlos Munoz signed off on the commencement of formal proceedings on January 27, just six weeks before the end of Boric’s term and the start of Kast’s administration.
The American embassy issued warnings to the government about the project’s security risks, and two days later, Munoz rescinded the decree, citing only unspecified “typographical errors”.
Washington wastes no time taking action
Although the statement did not name the sanctioned officials, the South China Morning Post confirmed that undersecretary of Telecommunications Claudio Araya, the head of the Chilean telecoms regulator Subtel Guillermo Petersen and Minister Munoz himself were among those affected.
“I was very clear and frank about our concern regarding the threats not only to Chilean security but to the security of the entire region,” Judd said.
Boric acknowledged that he had personally ordered the reversal of the decree signed by Munoz after receiving what he described as “explicit” threats from Washington, including the possibility of Chile being removed from the Visa Waiver Programme.
Chile is the only South American country in the scheme which allows its citizens to enter the United States without a visa. It is a point of national pride, making the Chilean passport one of the most powerful in the region.
Chile’s government transition derailed by dispute
The American sanctions landed at the heart of a dispute between the outgoing and incoming governments. Kast and his team said they had not been given sufficient information about the project’s progress or the gravity of the stand-off with Washington.
Boric said he had informed the president-elect about the matter during a 16-minute phone call on February 18. Still, his successor said the subject had merely been “mentioned”, with no details about the imminent sanctions.
Kast declared that he no longer trusted the information provided by the outgoing government and announced he would establish a task force to audit ministerial communications and assess possible legal action against officials involved in any irregularities.
The president-elect met Boric at La Moneda Palace in the first week of March. According to local media, the encounter lasted just 22 minutes, during which Kast demanded that Boric publicly retract his account of what had been discussed in their February phone call.
Boric reportedly refused, and Kast left the palace, announcing he was dissolving the transition coordination task force.
The decision froze more than forty meetings between officials from both administrations and was described by the press as the most serious rupture between an incoming and outgoing president in decades.
A poll by the Plaza Pública Cadem institute found that 42 per cent of Chileans believed Kast’s account of what had been communicated, 33 per cent sided with Boric, and 20 per cent believed neither.
China’s embassy weighs in, and Congress reacts
“China has no interest in geopolitical competition with any country,” Niu said. “There is nothing to worry about regarding this project’s impact on national security, because there is none.”
Experts were unconvinced by the ambassador’s reassurances, however.
Juan Pablo Toro, executive director and co-founder of the Santiago-based think tank AthenaLab, argued that the project had never truly been abandoned after Chile chose Google’s Humboldt route, and that Beijing’s continued backing pointed to interests extending well beyond Chile’s own telecommunications needs.
Such a connection could eventually allow scientific data from the polar territory to be transmitted at far greater speed – a prospect that, in his view, helps explain why Chinese actors remained engaged even after Santiago had already committed to a different Pacific project.
More broadly, Toro framed the cable dispute not as an isolated episode but as part of what he described as “an accumulation of decisions” by successive Chilean governments to block Chinese projects over security concerns.
In 2021, then-president Sebastian Pinera cancelled the Antipodas project, designed to export solar energy from the Atacama Desert to China via a 20,000 km submarine cable.
The succession of clashes with Washington has now reached Congress.
A senior legislative source told the SCMP that the China Mobile cable affair had “stirred senators from multiple parties, with calls already emerging for a legal mechanism to screen investments” in critical industries, one that could potentially offer protection against future US sanctions.
The same source said the proposal was “likely to be debated before the year was out”, though there were “questions about how to construct an independent framework capable of addressing national security concerns and geopolitical risks without deterring foreign investment in Chile”.
Meanwhile, politicians have already begun to respond publicly. While Kast and Boric were meeting at the La Moneda Palace last week, the Senate Foreign Relations Committee summoned Munoz and Foreign Minister Alberto van Klaveren to account for the episode.
Munoz told senators that Chilean law sets out more than 13 stages for completing a project such as the Chinese cable. According to the minister, his authorisation represented only the beginning of that process.
But van Klaveren also acknowledged that Chile lacked “an investment screening mechanism that incorporates national security considerations”.
“We have shortcomings in intelligence, which sometimes prevent us from properly assessing the strategic calculations that third countries may be making,” he said.
Kast’s dilemma as China and the US up ante
Although Kast was elected on a more radical rhetorical platform, he had been sending signals to markets and international partners that he intended to run a pragmatic administration.
Santiago is one of the few places in the region to have free trade agreements with both the United States and China. According to UN international trade statistics, Chile exports 37 per cent of all its goods to China, primarily copper, lithium, lemons and cherries, and imports a quarter of everything it consumes from the Asian country.
According to Chile’s Under-Secretariat for International Economic Relations, bilateral trade grew at an average annual rate of 7 per cent between 2020 and 2025, reaching a total of US$65.33 billion last year.
The United States, however, remains the leading source of foreign direct investment in the country, with a cumulative portfolio of US$12.5 billion.
Aware of both powers’ importance to Chile’s economy, the president-elect has been careful to temper his tone.
Before flying to Miami during the weekend to attend the launch of Trump’s newly announced “Shield of the Americas” initiative, Kast told journalists that “having the best possible relations with both China and the United States is not incompatible” and pledged to “honour and respect trade relations” with both countries.
“Right now, we don’t really have a strategy to navigate this new period. It’s more strategic, with sectors that are not just connected with competitive advantage but with strategic logic,” Borquez said.
The broader challenge facing Kast, he argued, was that the pragmatic two-track approach his administration had signalled might not survive contact with a world that no longer separated economics from geopolitics.
But position alone was “not a strategy and without a cross-party consensus on how to navigate great power competition”, the cable affair was unlikely to be the last crisis of its kind.
Others agreed that the cable affair was unlikely to remain an isolated episode.
“This is an example for other countries of what the United States is prepared to do in the coming years,” he said.
“Anyone who tries to negotiate critical infrastructure with the Chinese will cross a red line that Washington will not allow to be crossed.”
He was sceptical that formal investment screening mechanisms would resolve the tension. No government, he argued, had been willing to quantify what tighter restrictions on Chinese capital would actually cost.
Countries that had already introduced such regimes had seen Chinese investment fall sharply, with nothing to replace it.
For Urdinez, that calculus left the region facing a choice with no good options. Governments could preserve their commercial ties with China or avoid crossing Washington’s red lines. Doing both was becoming harder to imagine, he added.
“No one is willing to do that study. But someone is going to have to pay that cost.”