Taiwan and Nicaragua: Interview With Former Minister Azucena Castillo

Azucena Castillo is the former Minister of Finance of Nicaragua, about the economic relations between Taiwan and Nicaragua. Currently Ms. Castillo is a member of the National Assembly for the Constitutional Liberal Party (PLC), an opposition party to the government of Daniel Ortega.

Ms. Castillo is an active opponent of the last loan Taiwan had approved for Ortega’s government and revised by the National Assembly of Nicaragua (but has not been paid yet). The Nicaraguan media and some members of the opposition criticized Taiwan due to the strong influence the loan may have over the Nicaraguan socio-political crisis.

The loan was made through the Export-Import Bank of the Republic of China (Eximbank), a Taiwanese state-owned bank. Eliseo Nuñez, a member of the opposition party, referred to this loan as the “exercise of Taiwan’s mercenary diplomacy, because (even though) being a country that faces China (PRC), where human rights abuses are reported, Taiwan is also coming to support the Ortega government that has committed serious crimes.”

What is the Eximbank?

The Export-Import Bank of the ROC (Eximbank) is a government-owned bank that helps facilitate export and import trades between Taiwan and other countries. Financing loans to other governments is one of the services it provides. In the case of Nicaragua, the Eximbank agreed to make a loan to the Nicaraguan government in the amount of US$100 million dollars. The purpose of the loan is to cover part of the fiscal deficit originated from the sociopolitical crisis of 2018—which has caused the death of hundreds of citizens, destruction of public and private properties and general deficit stagnation in the economy of Nicaragua.

The deal was signed on January 22, 2019. This happened before the Nicaraguan National Parliament officially approved it, which received the Presidential Decree one month after its completion. This procedure turned into a controversy due to the lack of transparency of the process.

After a sociopolitical crisis that started on April 18th, 2018 Nicaragua’s GDP decreased 4.8% in the same year, with an estimate of it shrinking “the same amount or even lower to 5% in 2019,” said Castillo.

Castillo assures the Eximbank is capable of “meeting the numbers and the situation of the country (Nicaragua).” Even though Castillo recognizes that when the economy of a country develops, the country itself will acquire more debts in loans naturally, but she also says that the Nicaraguan case is different. “Nicaragua is caught in a sociopolitical situation that does not let the economy work, which affects all sectors.” To which she adds, “I found it quite unreal to be making more loans to Nicaragua. Even though, without being sanctioned, international agencies had stopped making certain loans.”

Given all these factors such as sanctions, debts and financial stagnation in which Nicaragua has become immersed, how could Taiwan’s Eximbank sign such a deal given it is highly likely Nicaragua won’t pay back?

“I consider Taiwan a friendly country, which has always been attentive to Nicaragua. However, Taiwan is a free and independent country on which China maintains constant harassment,” Castillo says. “Some of that might have arisen. It’s a touchy subject. But I wonder how the (Nicaraguan) government will realistically ensure the disbursement of the money.”

The Eximbank, Taiwan and China

It has been reported that the loan of $100 million dollars that Taiwan made to Nicaragua hasn’t been paid out. It appears that the government of Daniel Ortega is making “desperate measures to get the economy to work,” said Castillo.

Indeed, a publication made on the official news website of the Ortega’s government states that representatives of Nicaragua—among them the son of the President—were sent to Macau to attend the “10th International Forum on Investment and Infrastructure Construction.”

Several Chinese and Foreign government leaders, as well as more than 2,000 political participants, entrepreneurs and academics from around the globe attended this event. It is also worth noticing that Eximbank China (PROC) was also present in the event.

Entice Nicaragua to China?

In 2013, the government of Daniel Ortega signed a concession with Wang Jing. Mr. Wang Jing is the CEO of XinWei, a Chinese telecoms company. Under this deal, the consortium in charge—Hong Kong Nicaragua Canal Development Group (HKND)—was allowed to build on any part of Nicaraguan territory. The original plan was highly criticized by Nicaraguan environmental groups. Nicaraguans called President Ortega “vende patria”, or traitor, for conceding Nicaraguan territory to a little known Chinese businessman.

Castillo calls this project a “fiasco.” She also mentioned there has been speculation that “China was behind the concession approved in 2013.” She says that “right now, it has been five years already. Although one of the clauses in the agreement has met its deadline, there is no progress  of the project, nor any payments.”

Taiwan or China?

Castillo expressed that the government of Nicaragua “has sought to show signs that relations with Taiwan remain strong.” She continues, “the Taiwanese loan, which caused controversy because of the delicate circumstances in Nicaragua, and the support to the National Police are those signs.”

What Castillo wonders is how far Taiwan is taking into consideration what’s happening in Nicaragua.

Sources received by the author of this article confirmed yet another recent donation of $600,000 dollars made to the Nicaraguan Military Forces, on July 1st of this year. The donation was presented by the Taiwanese ambassador to Nicaragua Jaime Chin-Mu Wu in a formal ceremony in the capital of Nicaragua, Managua.

While the Taiwanese government publicly commits itself to defend democracy and being an international point of reference of it in the Asian region, it is also giving a constant support to a government with opposite values.

Suggestions to Taiwanese leaders

With a sincere laughter that showed her humility, Castillo answered that she believes “Taiwan has excellent leaders.” Rather, she stresses how much the Taiwanese government and its society can help Nicaragua develop. “For example: technological model in agriculture and industrial development; training for creating thousands of jobs for young graduates from our universities; investment; transfer of technology and social projects in education.” She also mentions the type of benefits Taiwan could get from Nicaragua, “Nicaragua is the ideal platform to produce and jump into the US market.”

When asked about switching recognition to China, Castillo says, “God forbid! Nicaragua could not [switch recognition from Taiwan to China]. I’m sure that the people of Nicaragua, and the opposition, which is at 67%, do not want to change from Taiwan to the PRC.” She continues, “we want no more dictatorships, much less to implement a dictatorial style of government like China. They (China) recognized too late that free trade was the door that would guide them, but still does not give its people the freedom to think, and to express themselves.”

Castillo remarked how Taiwan’s history of democracy should remain in the minds of the young Taiwanese generation. She compares Taiwan’s history to the history of Nicaragua’s democracy. Many Nicaraguans were convinced that the Sandinista revolution—led by the current president of Nicaragua— was going to bring democracy to the country. However, this turned into one more authoritarian regime less than 40 years after this historical event took place.

The Taiwanese youth

“Your ancestors gave you examples of gallantry and idealism while living under a dictatorial regime, and built the great free and independent Taiwan. That demonstrates they were youngsters who had very clear goals that helped them achieve the target they had set for their country.” Castillo says.

As for Nicaragua, “it has always been young people who have taken up our flag, and now that the country is back in trouble, young people are taking that flag again. This is happening because of a dictatorial type of government that does not respect the separation of powers; there is no rule of law.” She continues, “to you Taiwan’s young people I tell you, that just having that freedom of party plurality and the freedom of choice with transparency, is a treasure. I ask you to think about the young people in Nicaragua. Come to Nicaragua. We welcome you, and I want you to know that we admire you.”