Chile cancels deal with Chinese Aisino over data safety and US partnership

Chile cancelled a contract with a Chinese-German company consortium made of Aisino and Mühlbauer because of data safety concerns in order to remain in the Visa Waiver Program with the United States.

Chile passport Aisino
Chile cancels a contract with the Aisino-Mühlbauer consortium because of data protection concerns and to be sure to remain in the U.S> Visa Waiver program © Henry Thong

On November 15, the Civil registry and identification service of Chile announced they cancelled a public tender contract won by the Chinese company Aisino for processing Chileans’ identity documents.

The administration of Chile released a public tender in July in order to reduce costs to renew passport or ID documents. A passport in Chile costs 90 000 pesos (US $107), “one of the highest fees in the world” for its population.

Last month, the Aisino-Mühlbauer consortium was selected to create the new documents for the next 10 years.

Concerns about data protection with Aisino

Aisino is one of the largest Chinese technology companies and owns 52% shares of the consortium.

The contract was worth US $205 million for the next 10 years, far cheaper than the $680 million Chile provisioned in the previous contract, allowing Chileans to soon renew their passports for half the current cost and enjoy a 20% decrease in price for creating an ID card.

Aisino would be responsible for providing the software and hardware while Mühlbauer would intervene in the fabrication of the documents.

But according to the Chilean administration, Aisino refused to provide background information before signing the contract after they found some “inconsistencies“. The administration argues Aisino considered the request as “unfair“.

Politicians from the opposition party criticized the choice fearing for the protection of Chileans’ personal data.

The government spokesperson Jaime Bellolio confirmed some of the reasons for cancelling the deal had to do with data safety concerns.

Cancelling the deal to stay in the U.S. Visa Waiver program

Moreover, the ministry of Foreign Affairs confirmed that signing the contract would “very likely” cause the termination of the Visa Waiver program with the United States, as well as with Canada.

Few days after announcing the deal, a delegation from the Department of Homeland Security and the US Department of State went to Chile to evaluate the country’s eligibility to the Visa Waiver Program.

This assessment, carried out for all countries, was the opportunity to “discuss in details the most important sources of concern for the delegation“, without specifying whether they talked about the Aisino-Mühlbauer deal.

The Visa Waiver Program allows Chileans to travel to the United States for up to 90 days with an Electronic System for Travel Authorization (ESTA). This procedure, more convenient, faster (under 72h) and cheaper ($14) than requesting a visa is granted by the United States to 40 countries. Chile is the only American country in the list (Canada and Mexico have different simplified procedures).

Since 2014 and the participation of Chile in the program, Chileans traveling to the United States for business, tourism or transit increased fourfold.

As a consequence, the Civil registry and identification service of Chile called off the deal for not jeopardizing the Visa Waiver program with the United States.

A business decision with political implications?

But according to local media, Aisino argues to be the victim of “orchestrated attacks by competitors, parliamentarians and former authorities“. It explains “non-technical interests and criteria seem to have prevailed” in the decision, implying a political pressure coming from the United States.

The Aisino-Mühlbauer consortium plans on appealing the decision “to all the corresponding national and international legal entities“.

Aisino contacted Chile’s ambassador in China while the Chinese ambassador in Chile shared his state of surprise for cancelling a deal already made because of third-party interests.

In Chile, some worry about the political consequences on the country the decision could have.

How a business decision for processing identity documents and saving money became a political issue.

Read more about Chile

El Servicio de Registro Civil e Identificación, November 2021, Free accessGobierno de EE.UU. revisa elegibilidad de Chile para el Programa Visa Waiver, US Embassy in Chile, November 2021, Free accessAisino acusa "ataques" e informa que irá a la justicia ante decisión del Registro Civil de dejar sin efecto licitación de pasaportes, Emol, November 2021, Free acces

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