Thursday, March 20, 2014

Latin America and Taiwan

Mike Allison writes about former Guatemalan President Alfonso Portillo's admission of taking bribes from Taiwan in exchange for maintaining recognition. He discusses the issue in the Guatemalan context, but I was thinking also of the international one. If esteemed source Wikipedia is correct, then Taiwan is currently recognized by 22 countries, with Central America and the Caribbean constituting half.

From the perspective of incentives, this means Taiwan will do whatever it can to hold on to those countries, even while China starts to invest more heavily in Latin America, thus potentially creating a temptation to switch. Take the case of Costa Rica:

A similar story took place in Costa Rica, which severed diplomatic ties with Taiwan in favor of the PRC in 2007. China financed Costa Rica’s National Stadium and patrol cars for Costa Rica’s police force, as well as providingUS$900 million in credit for the expansion and remodeling of an oil refinery. On Xi Jinping’s recent visit, China pledged a further US$400 million loan for road construction and public transportation vehicles. Bilateral trade between Costa Rica and China reached US$6.17 billion in 2012.

Money talks. Taiwan is not capable of the scope of investment that China can provide and therefore resorts to more targeted investment, namely straight bribery. Portillo's (and who knows who else's) few millions is cheap, and despite Otto Pérez Molina's insistence that things are different, Taiwan has every reason to keep the flow going because over time its support has gradually trickled away.


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