di Niccolò Locatelli
The main driver behind the People’s Republic of China’s engagement with Latin America is the quest for cheap energy and trade opportunities. This explanation holds true especially for South American countries, while in the case of Central America and Paraguay top national interests come into play: Beijing has to struggle with the Republic of China (Taiwan) for international recognition.
Aligned like others in the world to Washington’s decision not to recognize the People’s Republic’s regime, Latin American countries begun to switch diplomatic recognition after Kissinger and Nixon visited Beijing, and after mainland China was given China’s seat at the U.N. Security Council. The trend worsened for Taiwan after the U.S. itself switched recognition in Beijing’s favor in 1979: just in the 1970s Taipei lost eleven Latin American allies.
The island tried to invert the course of the events at the end of the Cold War: the PRC’s international isolation after the Tiananmen incidents and the growth of a nationalist sentiment known as «Taiwan consciousness» led to a renewed effort to win diplomatic recognition and brought the Taiwan issue on the top of Beijing’s Latin American agenda.
Nowadays the Republic of China (ROC) has formal diplomatic relations with just 23 countries, 12 of them are in Latin America: Paraguay (the only South American one), six Central American countries (Belize, El Salvador, Guatemala, Honduras, Nicaragua, and Panama), and five Caribbean countries (the Dominican Republic, Haiti, St. Christopher & Nevis, St. Lucia, St. Vincent & the Grenadines). Latin America is clearly Taipei’s most consistent and relevant stronghold in the world, and it’s no wonder that the region has been at the center of the attention from the island ever since the Cold War era.
The ROC and the Central American and Caribbean area have indeed some similarities and some reasons for a common interest in developing ties: they both opposed communism in the past and they both are now democracies with market economies; Taiwan represents a success-story in economic, industrial and technological development, a major source of investments, and a possible hub to the vast mainland China market. And it is also a country that has always treated these group of small and not relevant nations – that usually have to scramble for international attention – as important allies. Latin America is rich in resources, a diversified market, a manufacturing gateway to the U.S., and as far as Central American countries are concerned, a staunch ally of Washington, with the exception of Cuba. These countries also serve as an excuse for Taipei’s «transit diplomacy», i.e. Taiwanese official’s use of refueling stops in America to meet unofficially with U.S. policymakers while en route to State visits in the south.
Taiwan’s objectives in its relations with Central and South America are three: foster ties with those countries that recognize the ROC, garner support for its re-admission at the United Nations, and diversify its export markets. To achieve them, it has developed a set of diplomatic and economic tools. Personal connections with the region’s elite is one of them: «the Taiwanese government is conscious of the need to “warm the coals before starting the fire”, and carefully identifies young bureaucrats and military officers early on in their public careers who are likely to become influential players in the future».
In the late 1980s, Taiwan adopted a flexible diplomacy and started to maintain relations with countries that unrecognized it for Beijing, opening representative offices in Argentina, Brazil, Bolivia, Chile, Colombia, Ecuador, Mexico, Peru, Venezuela, Uruguay.
The island holds observer status at the System for Integration of Central America (SICA; it’s the first observer from outside the Western Hemisphere) and the Forum of Central American Presidents and Legislators; it is an extra-regional member of the Central American Bank for Economic Integration and it has formal working relations with the Interamerican Development Bank (IADB) and the Central American Bank for Reconstruction and Development. Taiwan’s government has also established a Central and South America Research Center.
Taipei is also in the APEC and it has launched the Democratic Pacific Union, a group of States committed to promoting democracy, peace and prosperity with 26 members from all over the Pacific Rim. It has been lobbying hard to get observer status at the OAS, just like the PRC, but it has failed so far.
Economy is Taiwan’s main tool. In 1984, it established a Special Committee for the Promotion of Trade and Investment in the Caribbean and Central America, followed in 1988 by a Fund for Economic Development. Bilateral trade has kept increasing since the ’90s, although nowadays it lags far behind Sino-Latin American trade; Taiwan is pushing forward Free Trade Agreements: deals with Panama, Guatemala, Nicaragua, El Salvador and Honduras have been finalized, while those with the Dominican Republic and Paraguay are still under negotiations.
Aid and FDI are also relevant: Taiwan’s earthquake and typhoon recovery assistance has indeed always been much appreciated by the region, given Taipei’s long experience with natural disasters and its eagerness to fund reconstruction; so is its interest (matched by the PRC’s) in funding infrastructure projects that have fallen out of favor among Western donors.
Aid doesn’t necessarily have to be financial, as the ROC has often sent experts to the region for development projects; nevertheless, money continues to be the main bond between the island and the region: Taiwan is the single largest donor to Caribbean basin countries like St. Kitts & Nevis and St. Vincent & the Grenadines; the establishment of diplomatic relations with Grenada (1989) and Nicaragua (1990) was combined with the provision for respectively a US$ 10 million and a US$ 100 million low interest loan. More than US$ 30 million were donated to Managua after Ortega’s inauguration in 2007, in order to prevent a replica of the pro-Beijing switch Ortega did when at the head of the Sandinista government in the 1980s.
The total amount of cash devoted to the region is secret, and its delivering procedures have cast more than one doubt about transparency in the past, when money was funneled directly to Central American Presidents, for their campaigns or for other discretionary uses. This normalcy has however come to an end with the parallel democratizations of Taiwan and its Latin American partners – that implies a stricter oversight on the State budget – and the outbreak of some scandals involving past dignitaries such as Costa Rica’s Miguel Ángel Rodríguez, Panama’s Mireya Moscoso and Nicaragua’s Miguel Alemán. In a 2008 trip to the region, President Ma Ying-Jeou announced his intention not to hand out any grant money and that all charitable donations should be processed through government procedures
Investment is on the rise as well, and it’s concentrated in Mexico, Panama, Nicaragua and Honduras; despite the government’s request of investing in Central and South America, many companies have held back, wary of the possibility that the host countries could favor the Chinese link.
The People’s Republic of China has criticized what is known as Taiwan’s «checkbook diplomacy», but in the last years it has started to make the same moves, facilitated by the absence of independent medias and public scrutiny: in some cases, it just outbid the ROC. In 2004, Dominica switched recognition after Beijing trumped Taipei’s US$ 9 million assistance with a US$ 112 million offer over six years; in 2005, the PRC won Grenada’s diplomatic recognition by offering to build 2000 low-income houses and new hospital facilities, supporting the agricultural sector, transferring US$ 1 million in cash for Grenadian government scholarships, granting US$ 6 million to complete community projects originally funded by Taiwan, and by providing a US$ 1 million budget support until 2009. In addition, Beijing promised financial assistance to rebuild and expand Grenada’s national stadium for the 2007 cricket World Cup. Taiwan had offered US$ 10 million to help with reconstruction from damages caused by Hurricane Ivan. With similar assistance bids, Beijing had already won Bahamas’ and St. Lucia’s recognition in 1997; in this latter case, the Sino-Taiwanese struggle has become a matter of domestic policy, with the Labor Party supporting Beijing and the United Workers Party supporting Taipei: when the latter won, in 2007, it switched recognition back to Taiwan within the first months in office.
The most relevant recent switch is however that of Costa Rica: in 2007 San José became the first Central American State to recognize the People’s Republic of China. The «Costa Rican nexus» is important under several aspects: the country has a geopolitical clout in the area; its president, Mr. Óscar Arias, is an advocate of democracy and a Nobel Peace Prize winner in 1987 for his role in helping to end the Central American civil wars; he is still one of the most respected and influential Latin American dignitaries, and a valued negotiator. The country enjoys a warm relationship with the United States, and it’s frequently cited as a model for democracy and business.
Costa Rica’s benign image in Washington allowed China to sidestep accusations that its outreach to Latin America focuses primarily on leftist countries that have hostile relations with the U.S.; the PRC didn’t choose Ortega’s Nicaragua.
Even though a domino effect in the region hasn’t unfolded yet – no other Central American country has followed Costa Rica and changed allegiances so far – Beijing is not worried: after all, its diplomatic victory over Taiwan in the area is seen as a long term task, not as an urgent goal. The Dragon is focused on creating an attractive model for the region, so that the benefits of bilateral ties with mainland China become clear to everyone: before recognizing Beijing, San José had it buying US$ 300 million of State bonds and providing aid to the country for US$ 130 million, plus scholarships to enable study in China; the PRC is spending US$ 74 million to build the capital’s new soccer stadium, scheduled to open in 2011. A free trade agreement was successfully negotiated in the days before the presidential elections, in which the two main contenders, winner Laura Chinchilla and Otto Guevara, both praised Beijing’s assistance and its economic might. The pact, which has yet to be ratified by the Costa Rican parliament, will lift duties on 99% of the Central American country’s exports to China, including its high-quality coffee and other farm products; 90% of Chinese imports, including electronics and appliances, will be exempt from tariffs.
Chinese interest doesn’t come without strings attached, so in 2008 Arias asked the fellow Nobel Peace Prize winner and Tibet’s spiritual leader, the Dalai Lama, to postpone his private visit to the country lest it would hinder the possibility of hosting the PRC’s President Hu Jintao that same year.
Occasionally, the Sino-Taiwanese struggle for Latin American recognition has taken the center of the stage at the United Nations. Basing on the «one head, one vote» principle that governs the U.N. General Assembly, Taiwan has managed to have its allies supporting its attempt to win back the U.N. seat: since 1993 Latin American countries have been sending resolutions in order to promote Taipei’s return and to consider its particular situation. The People’s Republic has harshly contested this behavior and hasn’t hesitated to exploit its veto power, something it’s usually loath on using at the U.N. Security Council: in 1997 it used for the first time (other than for balloting to choose a Secretary General) to halt the deployment of 155 peacekeepers in civil-war-torn Guatemala because of that country’s ties with the ROC, and removed it only after the Central American country promised to no longer support Taiwan’s UN membership bid.
After opposing the establishment of the U.S.-led multinational force and abstaining in the 1994 vote, and after fighting against the extension of the U.N. mission in ROC’s ally Haiti in 1996, Beijing eventually contributed 125 riot police to the Minustah in 2004, in its first deployment of peacekeepers in the Western Hemisphere. The earthquake that devastated the Caribbean State in January 2010 propelled an offensive to win diplomatic recognition: the PRC vowed to outbid Taiwan’s US$ 5 million-worth help package by sending US$ 2 million in medical supplies and pledging to donate US$ 4.4 million in aid. The 8 Chinese peacekeepers died in the earthquake doubled to 16 the total figure of Beijing’s officials that lost their lives in U.N. missions.
Beyond the case-studies and the Taiwan issue, it is noteworthy that Beijing’s expansion in the Caribbean follows the same path of that in South America: integration in the regional bodies (the Caribbean Development Bank), holding of periodic meetings(starting with the China-Caricom Economic and Trade Cooperation Forum in 2005), party-to-party diplomacy, political attractiveness (that of a rising superpower with no colonial or imperialist past in the hemisphere), economic interests (in the region’s offshore financial services, and as approved tourist destinations), development projects, impressive bilateral trade growth (by a factor of 100 between ’90 e ’08 with Caricom countries); given China’s little demand for regional products and services, mainly raw materials, commerce is heavily one-sided: in 2008, 93% of it was made of Chinese exports, mostly machinery, electronics and textiles. The PRC trades predominantly with the countries that diplomatically recognize its regime (91.5%), as a reflection of the political significance of its penetration in the region. Still, the years of «diplomatic blackmail» seem to be over now, largely as a follow-up of the new detente between the two shores of the Taiwan Strait; Beijing has upgraded semi-official relations with Taipei’s diplomatic partners, in the hope that ultimately they will fully understand the benefits of having ties with mainland China.
The rising interest of the PRC in Latin America has economic and political implications for the region and for the world.
 Pérez Expósito F.L. (2004), Taiwán y América Latina: Estrategia de Aproximación y Situación Actual, Unisci Discussion Paper: http://revistas.ucm.es/cps/16962206/articulos/UNIS0404130003A.PDF.
Speaking of the seven nations of the Central American isthmus, Erikson and Chen note that «not coincidentally, this group also represents the strongest bulwark of support for the United States in the Western Hemisphere. Several of these countries sent troops to Iraq as part of the U.S.-led coalition, and they have dutifully partnered with Washington in efforts to contain regional adversaries such as Cuba’s Fidel Castro and Venezuela’s Hugo Chávez. In November 2006, Panama won a two-year term as the Latin American representative on the United Nations Security Council, breaking a lengthy impasse between Chávez, who campaigned aggressively for Venezuela to assume the post, and the United States, which backed Guatemala – an ally of Taiwan for the vacant seat». Erikson D.P., Chen J.(2007), China, Taiwan and the Battle for Latin America, https://www.thedialogue.org/PublicationFiles/Erikson-Chen-1%20%282%29.pdf.
 Ibidem, p. 73.
 Mann S. (2002), Discovery of a Terra Incognita, cit., p.36.
 Liu I. (2008), The Big China and Taiwan Tussle: Dollar Diplomacy Returns to Latin America, http://www.coha.org/the-big-china-and-taiwan-tussle-dollar-diplomacy-debuts-in-latin-america/.
 Peralta G.A. (2006), De espaldas al dragon Las relaciones de Centroamérica con Taiwán, Nueva Sociedad 203, Mayo/Junio, http://www.nuso.org/upload/articulos/3360_1.pdf; Erikson D.P., Chen J.(2007), China, Taiwan and the Battle for Laitn America, cit.: Watson, C. (nd), Adios Taiwan, Hola Beijing: Taiwan’s Relations wth Latin America,
 Li He (2005), Rivalry between Taiwan and the PRC in Latin America, “Journal of Chinese Political Science”, vol.10, no.2., p.92; Pérez Expósito F.L. (2004), Taiwán y América Latina, cit., p.13.
 Apparently, not all the Grenadian officials took note of the switch, as some of them accidentally played the Taiwanese national anthem at the inauguration of the stadium, built by the PRC at a cost of US$ 40 million. Prime Minister Keith Mitchell quickly ordered an investigation into the matter. Erikson D.P., Chen J.(2007), China, Taiwan and the Battle for Laitn America, cit.
 Domínguez, J. (2006), China’s relations With Latin America, cit.; Erikson D.P., Chen J.(2007), China, Taiwan and the Battle for Laitn America, cit.; Erikson D. (December 16, 2009), China in the Caribbean, cit.
 Erikson D. (16 December 2009), China in the Caribbean, cit.
 Erikson D. (May 27, 2009), China’s Strategy toward Central America: The Costa Rican Nexus, http://www.jamestown.org/single/?no_cache=1&tx_ttnews%5Btt_news%5D=35040&tx_ttnews%5BbackPid%5D=13&cHash=136ed4fb60.
 Briges T. (July 8, 2009), China makes its move as U.S. falls back in Latin America, http://www.mcclatchydc.com/2009/07/08/71510/china-makes-its-move-as-us-falls.html.
 Schmidt B., Levin J., Costa Rican Candidates Pledge China-led Recovery as Vote Nears (February 5, 2010), http://www.businessweek.com/news/2010-02-05/costa-rican-candidates-pledge-china-led-recovery-as-vote-nears.html; Costa Rica, China draw up free trade pact (February 11, 2010), http://www.chinadaily.com.cn/china/2010-02/11/content_9462665.htm.
 Li He (2005), Rivalry between Taiwan and the PRC in Latin America, cit.; China, in rare U.N. Veto, Bars Guatemala Mission (Januray 11, 1997), http://www.nytimes.com/1997/01/11/world/china-in-rare-un-veto-bars-guatemala-mission.html?pagewanted=1.
 In 1994 the Chinese delegation argued that force was an ineffective tool of conflict resolution; its opposition was somehow less related to Haiti’s Taiwan recognition. Fravel M.T. (1996), China’s Attitude toward U.N. Peacekeeping Operations since 1989, “Asian Survey”, Vol.36, no.11, pp.1102-1121.
 China and Taiwan tussle over Haiti (January 22, 2010), http://english.aljazeera.net/news/asia-pacific/2010/01/2010122691841411.html.
 Erikson D. (February 4, 2010), The Politics of Disaster Relief: China, Taiwan and the Haitian Earthquake, http://www.jamestown.org/programs/chinabrief/single/?tx_ttnews[tt_news]=36009&tx_ttnews[backPid]=25&cHash=f02f52da38.
 Mora F.O. (1997), The People’s Republic of China and Latin America, cit.