By Nicolás Pabón Caicedo
October 1, 1949 marks a before and an after in Chinese history. After an intense battle of several decades between the ruling party (Kuomintang) and the strong Chinese Communist Party (CCP), the so-called Chinese Revolution ended, with the consequent establishment of the communist government in Beijing. As a result, the Kuomintang survivors decided to move to the remote island of Taiwan and rule from exile.
The world order at that time was rather unstable.The Second World War had just ended in 1945 and the rise of the Soviet Union as a world power started the so-called cold war, which lasted almost until the end of the century.
The role of the People’s Republic of China during the cold war and proxy wars had a great influence on conflicts such as the Korean War and the Vietnam War. At that time, China’s military support to different nations represented a valuable diplomatic strategy by the Beijing government, seeking international recognition and legitimacy towards Taiwan.
On October 25, 1971, the vote at the United Nations General Assembly took place to resolve the conflict between China and Taiwan and to assign the role of permanent member of the organization’s Security Council. The result was 76 votes in favor of the recognition of China (35 against and 17 abstentions). As for Latin America, Cuba, Mexico, Ecuador, Peru and Chile voted in favor of the recognizing of China, while Panama, Colombia and Argentina decided to abstain. Therefore currently, in the year 2020, only 15 countries in the world recognize the state sovereignty of Taiwan, and 9 of them are Latin American countries).
Thus Latin America, and in particular Central America, have become a battleground. The United States intends to keep the region as its main sphere of influence; Taiwan is committed to maintaining its latest diplomatic ties, not only in the region but in the world, while China tries to position itself in front of the United States, to reduce Taiwan’s diplomatic ties as much as possible and guarantee the supply of raw materials through different types of credits , soft power and the so-called checkbook diplomacy.
The interest in developing the national economy through Chinese investment is the main reason that has been justified by the countries that have recently decided to cut diplomatic ties with Taiwan. This is exactly what China intends to achieve with its “checkbook diplomacy”: promoting large-scale investments that make inevitable to approach China to the detriment of Taiwan. However, checkbook diplomacy is a strategy widely known in Taiwan too, which, although in difficulty, is unwilling to lose its few business partners in the region.
A large number of projects and buildings built in Central American countries have been funded primarily by Taiwan. For example, in Nicaragua the construction of half of the public buildings was financed by Taiwan. The same happens in the construction of large buildings in El Salvador and Costa Rica. However, the effect of Taiwan’s checkbook diplomacy is becoming less attractive to the countries of the region than the incentives that China can offer.
But although everything seems to indicate that the recognition of China as a sovereign country over Taiwan, and of the “One China” policy, is already a fact acquired by the international community, there are still 15 countries that maintain their support for the Taipei government. Of these 15 countries, 5 are in Latin America (Haiti, Nicaragua, Honduras, Guatemala and Paraguay) and although some are more vulnerable than others, some still show little willingness to establish diplomatic relations with China.
Guatemala is one of the clearest examples of those governments that firmly secure their support for the sovereignty of the Taiwanese government. Guatemala receives millions of dollars a year from Taiwan in investment projects in road infrastructure and large government buildings. Furthermore, Guatemala’s foreign policy has traditionally been very close to the United States, a country which, although it has only unofficial and informal relations with Taiwan, represents for Taiwan an undisputed support in the face of China’s imminent threat. Due to this configuration of powers in the region, Guatemala has become one of Taiwan’s strongest diplomatic partners in the world.
The remaining states that recognize the Taipei government lack economic, technological, political and military power. Because of its characteristics, these countries must take advantage of the aforementioned checkbook diplomacy. These small countries are the current battleground between China and Taiwan, which together can bring great benefits to the region. Hence this group of countries have a great opportunity to attract huge amounts of investments issued by Taiwan and by counterweight in the same way from China.
Although Beijing claims that diplomatic ties with Taiwan need not be severed in order to trade with China, large loans and investment projects are based on bilateral agreements which reduces Taiwan’s participation. For example, tensions in the Central American integration system (SICA) are increasing as 4 of its 8 members currently recognize the Beijing government. While the governments of Nicaragua, Honduras and Guatemala have entered into free trade agreements with Taiwan.
It is precisely in Central America and the Caribbean that Taiwan has the greatest influence and, therefore, where the economic efforts of mainland China are focused (…) on small islands such as Antigua and Barbuda, Barbados, Granada, Santa Lucia or Dominica, which they benefit from a diplomatic struggle in a totally unexpected way. (Pisabarro, 2018).
Checkbook diplomacy is a resource that in this particular case can be appreciated from different perspectives. On the one hand, China uses its enormous economic potential, offering new opportunities to the countries of the region, while at the same time positioning itself ahead of the United States. On the other hand, Taiwan strives through the commercial consensus not to lose the small diplomatic support which, although reduced, will allow its voice to survive in various international instances.
The countries of Central America and the Caribbean will benefit from the situation if they are able to carefully manage and administer the loans and resources granted by the parties concerned.
However, the long history of these countries in terms of waste, corruption and bad administration means that these huge amounts of investment could become a dangerous double-edged sword.
Author: Nicolás Pabón Caicedo
(The opinions expressed in this article are solely those of the author and do not necessarily reflect the views of World Geostrategic Insights)