The US Is Inadvertently Threatening Taiwan’s Central American Alliances

Taiwan has received unprecedented support from the United States, at both the executive and congressional levels, since the election of President Donald Trump. This has come in the form of legislation like the Taiwan Travel Act, which aims to boost high-level visits between executive and business leaders of both countries, and the proposed TAIPEI Act, which would mandate the reevaluation of relationships between the United States and any country which decides to switch its diplomatic allegiance from Taipei to Beijing. More recently, reports revealed the United States was prepared to sell Taiwan more than US$2 billion in tanks, surface to air missiles and other weapons.

However, political developments across the Pacific Ocean could inadvertently affect Taiwan’s budding friendship with the United States and its unpredictable president—and not only because the aforementioned arms sale was reportedly stalled ahead of trade negotiations between Trump and Chinese leader Xi Jinping at the recent G-20 summit in Osaka, Japan. (Taiwanese defense officials said last week they expect the sale to proceed.)

Last March, Trump declared his country was going to suspend its financial aid to countries in the Central American Northern Triangle⁠—El Salvador, Guatemala and Honduras—as retribution over migrants from those countries entering the United States through its southern border. El Salvador switched its diplomatic recognition last year from Taipei to Beijing, reportedly after China promised to provide funds for the development of a port—a request Taiwanese officials claimed they had declined. Guatemala and Honduras, meanwhile, are two of Taiwan’s remaining 17 diplomatic allies.

Trump’s decision was a follow up to a threat he made last October, when Trump claimed “migrant caravans” were heading toward the border. At the time, many dismissed his words as campaign rhetoric ahead of November’s midterm elections. But Trump has continued to press on the issue; despite his campaign promise to reduce the number of immigrants into the United States, this figure is now at an all-time high. His March announcement to suspend aid could leave the three Central American countries searching for new financial benefactors. 

Plenty of countries are eager to enter the fray. Russia, for example, announced its intention to increase its presence in the region by improving cooperation, trade, investment and social development in Central America. Moscow’s announcement came within hours of the suspension of U.S. aid. Russia might not have much interest in disrupting the diplomatic relationships of Taiwan, but there is one country that does: China.

Since Taiwan President Tsai Ing-wen (蔡英文) took office in 2016, China has ramped up its efforts to reduce Taiwan’s international influence by promising access to its giant consumer market and pledging vast financial resources in the form of loans and development projects. Beijing has successfully lured five countries, most recently El Salvador, into switching diplomatic ties from Taiwan to China. The suspension of United States aid might cause Taiwan to lose even more.

Honduras and Guatemala are developing countries that still rely on international aid to execute a significant number of projects for low-income people in rural areas. If the United States were to suspend its aid, it is almost certain that this pair of Taiwanese allies will look to fill that void with assistance from other countries—and this gives China a great opportunity to further reduce the number of countries that still recognize Taiwan as an independent nation.

Taiwan must thus pay very close attention to Central American affairs. Even before the news of the suspension of aid was reported, there were concerns that some of the said countries were considering a change in ties.

Last year, the Honduran ambassador to Taiwan had to publicly deny rumors that the Honduran Minister of Foreign Affairs was in Beijing negotiating the terms of an agreement to switch the country’s recognition. (This rumor was later found to have allegedly originated from a Chinese internet user.) Later that year, Honduras President Juan Orlando Hernandez had to address the question about a possible switch by saying: “We’re still with Taiwan. Each country follows the principle of self-determination, that it can make its own decisions. For the time being, we’re betting on a commercial relationship with Taiwan, a window to enter the Asian market.”

Guatemala also faced some rumors of a possible switch of ties as well.  These rumors even reached the United States Senate, prompting Republican Senator Marco Rubio to advise Guatemala not to follow El Salvador’s steps or risk losing United States support via Twitter. 

That threat was a powerful one, heard by many countries that rely on U.S. financial support and would rather not risk it by defying U.S. warnings of possible consequences should they switch ties from Taipei to Beijing.

However, if the United States goes through with the suspension, is there any other leverage that they can use to deter other nations from switching ties? 

The United States and the aforementioned Latin American countries have a long relationship of cooperation, but whether or not the said relationship is strong enough for them to refuse the Chinese offer of financial support is far from certain.

Taiwan cannot compete head-on with China’s so-called “dollar diplomacy.” However, there are other aspects that must be taken into consideration. Many countries that have received loans from the Chinese government are not precisely happy with the results, because of accusations that the projects they finance place an unsustainable burden on nations that do not have strong economies, creating what many define as “debt traps.”

This has already been observed in Belt and Road target countries like Sri Lanka, which handed over a port to China after it could not make payments on its loans. In Costa Rica, which switched ties from Taipei to Beijing in 2007, China failed to keep one of its biggest promises: Costa Rica’s US$1 billion oil refinery project. The joint venture was stalled repeatedly and ultimately cancelled after nine years of inaction. 

Taiwan needs to present itself as a better option in this regard by emphasizing that it is not looking to trap governments by insisting on loan agreements countries will not be able to repay. Taiwan commissions feasibility studies before financing projects to ensure they will be sustainable in the future—an increasingly attractive proposition to countries wary of Belt and Road financing plans.

Taiwan can also point at successful cooperation projects like those being implemented by the Taiwan Sugar Company in Honduras to help local coffee bean producers to build their coffee brands. Honduran coffee can already be purchased on Taiwan’s high speed trains. Taiwan is also helping the Central American nation to improve its avocado production, marketing and distribution.

Taipei can—and must—emphasize these points when convincing its allies to strengthen bilateral ties and shrug off advances from Beijing. Aside from the economic aspects, Taiwan’s remaining allies should understand the ideological advantages of maintaining existing ties as a way to support global democracy—an imperative only underscored by the ongoing protests in Hong Kong, to which Taiwan’s government has lent its unconditional support.

Considering how important the issue of immigration is for Donald Trump—who currently trails behind several potential presidential opponents as he approaches his 2020 bid for reelection—it appears unlikely his administration intends to reconsider its position regarding the suspension of aid to Central America, or to take into consideration the collateral damage that Taiwan might suffer.

With only 17 diplomatic allies left, Taiwan must plan its strategy carefully to make sure that even if the suspension of United States aid goes through, its diplomatic relationships in Central America will not be severely affected.

(Feature photo from Taiwan Presidential Office on Flickr, CC BY 2.0)