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Adios Taiwan, Hola Beijing
Taiwan's relations with Latin America
Cynthia Watson
6/18/2004

This will be the first in a two- part series addressing Latin American ties with Taiwan and China. This piece will focus largely on Taiwan's ties with Latin America, while the second part appearing in issue 12 will examine PRC relations with this region.

Latin America is the only place in the world where Taiwan and the People's Republic of China (PRC) are both actively involved in political, economic, and diplomatic contests over state-to-state representation. For Taiwan, the states of Central America and Paraguay represent a relatively solid regional commitment to its status as a state separate from the PRC. If this recognition pattern, representing a significant portion of Taiwan's support for claims of legitimacy in the international system, were to change, Taiwan's position of claiming a sovereign state status would deteriorate dramatically. The support is based largely on Taiwanese financial assistance that is drying up at a time when Beijing would have little trouble outbidding Taiwan in a direct competition. Apparently, though, Beijing has had other priorities than this part of the world.

During the years immediately following the PRC's establishment in 1949, Latin American states continued to recognize the Kuomintang government in Taipei. However, with President Nixon's visit to the PRC in 1972 and the United Nations recognition of Beijing the prior year, South American states, along with Mexico, began to follow suit in recognizing Beijing. While some of the shifts took longer than others (Colombia's democratic, anti-communist government did not accept Beijing as the rightful government of China until 1980), every South American state, with the exception of Paraguay, eventually accepted Beijing.

Central America, a region which has long felt acutely ignored by the global community, has continued to recognize Taiwan. Costa Rica, for example, has recognized Taiwan as the government of China for sixty years; reversing such a posture would be a major change in policy. Central American states have been delighted to receive the technical and medical assistance Taiwan so often supplied after the humanitarian or natural disasters which plague the region but have been largely ignored by much of the global community. Because Taiwan and these countries often suffer from earthquakes and typhoon flooding, the exchange of assistance was a natural phenomenon. Additionally, Taiwan was willing to offer much needed financial assistance to Central American states, in the years prior to the genuine consolidation of democracy in the 1990s. Indeed, Taiwan's role in this part of the world is demonstrated by the fact that Panama, the jewel in the Central American crown because of its highly visible Canal, still recognizes Taiwan--even though PLA-related activities by the Hong Kong-based Hutchinson Whampoa company continue to evoke significant gossip about possible transfer of recognition.

Beijing's interests in this region go beyond its successful acquisition of diplomatic recognition by South American states. Beijing has long been interested in penetrating these markets, but, with the exceptions of Brazil and Mexico, they are too small to justify major effort. In the Brazilian case, raw materials and undeveloped goods, such as soybeans and several other foodstuffs, are exchanged for Chinese consumer goods. While some analysts believe that the real basis for the ties between these states is the reality of two regional powers seeking what they deem "appropriate" recognition by the international community, current conditions indicate that trade ties are growing. Oddly, Brazil produces almost no government specialists on China, while Beijing is producing a steady number of Latin American analysts. This curious state of affairs may say more about Brazil than anything else, but is a noteworthy point at a time of growth in trade and other relations.

Chinese interest in Mexico, meanwhile, has focused first, on its access to U.S. markets through the 1994 North Atlantic Free Trade Agreement (NAFTA), and second, on Mexico's proximity to the United States. Chinese economic and trade interests viewed NAFTA in its early years as a mechanism for easier access to the U.S. market. Activities were therefore undertaken with Mexican firms to avoid sanctions on Chinese goods. In recent years, this activity has slowed dramatically as Beijing began reaching out to other parts of the world to increase trade. Mexico's location, however, remains useful to Beijing as an access point to the United States as well as serving as a useful opening to the rest of Latin America.

Reversals for Taiwan?

Taipei has retained its block of states, conveying diplomatic recognition on Paraguay and the small Central American states. The reasons for this are straightforward, but may change in the current international environment. First, these are all states that have had to scramble to get international attention, while Taiwan has treated them as important allies. Second, Taiwan has been able to offer two particular types of assistance to this region repeatedly: earthquake and typhoon recovery aid. The Central American states suffer from both of these natural disasters periodically, as does the island. Taiwan's strong responses to these problems have translated into much-needed help for the region, such as when Hurricane Mitch hit in 1998. Third, Taiwan, particularly in the days before its emergence as a vibrant democracy, could offer foreign assistance to its Latin American allies as a major tool of statecraft, without requiring tangible proof of its impact on these states. With increasing democratization, greater legislative oversight of such expenditures has made this much less useful as a long-term instrument of achieving the island's goals of maintaining, if not expanding, its diplomatic recognition. Finally, the states of Central America have increasingly been the target of Taiwan's negotiations for free trade agreements, which would enhance the island's ability to sell goods and retain diplomatic recognition. While only Panama has agreed to a free trade agreement, these arrangements remain a crucial goal as Taiwan attempts to diversify its markets while solidifying diplomatic relationships.

This situation may change if Beijing were to turn its attention to the region. At present, Central American states represent such small markets, often producing the same products as the PRC, that Central America has not been a focus for China unless it has been to note it will not tolerate dual recognition of Taipei and Beijing. [1] Should Beijing make a concerted effort to sway these governments, they may fear that they would have only a single opportunity to extract a good technical and assistance package from Beijing before getting lost in the long list of states with which China has diplomatic ties. Beijing simply has not shown the interest in making a "run" on the region; Taiwan's advantage could easily be met by Beijing should such a move occur.

Taiwan's presence in Paraguay is significant, but the key to its maintenance of international support is in Central America, with Panama at the top of the list. Panama, Costa Rica, Nicaragua, El Salvador, Honduras and Guatemala represent just short of one quarter of Taiwan's diplomatic recognition around the world. If these states were to switch recognition from Taipei to Beijing, the damage to Taiwan's confidence and its limited claims of legitimacy would be alarmingly serious. In particular, if President Miguel Torrijos were to decide that Beijing connections were more valuable than those with Taiwan, and transferred recognition, it is highly likely that the remainder of the region would follow suit, primarily because Panama is a nominal leader for the area. Taiwanese officials frequently cite the depth of their ties to the Central American leadership and the few presidential visits of Taiwanese officials almost invariably are to this region. However, Taipei's deep concern over the Honduran president's decision not to attend Chen Shui-bien's 2004 inauguration is a measure of Taiwan's nervousness. Coming on the heels of the Dominican Republic's reversal of relations in the week following Chen's reelection on March 20, 2004, Taiwan and China both may feel a sense of growing momentum.

The current state of play is that Taiwan retains Central American recognition and visits by the island's officials, including President Chen and Vice President Annette Lu, over the past couple of years have brought some sense of satisfaction to the much-ignored Central American Republics. One is hard-pressed to see how Taiwan will be able to maintain this monopoly long-term, particularly if the PRC chooses to push its financial assistance and growing technical potential in this oft-exploited region. While loyalty to Taiwan may have led to these ties for the past six decades, virtually all states-particularly small ones-are forced to defend their national interests more vigorously than larger states (as Taiwan knows) because the stakes are so high. Central American states may find that loyalty simply costs too much when the big Chinese state comes calling.

NOTES:

1. Foreign Broadcast Information Service (FBIS), "PRC Spokesman Calls on Panama's President-Elect to Respect China's Stance," CPP20040511000141, 11 May 2004 (online edition).

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Cynthia Watson is a Professor at the National War College. The views expressed in this article are those of Cynthia Watson, not those of the National War College, Institute for National Strategic Studies or any U.S. Government agency.

This article appears on AFAR with permission from Jamestown Foundation, China Brief.

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