LATIN AMERICA: TAIWAN TAKES STOCK OF NEW POLITICAL

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 003094

SIPDIS

STATE AIT/W

E.O. 12958: DECL: 10/03/2014
TAGS: PREL PGOV CH TW
SUBJECT: LATIN AMERICA: TAIWAN TAKES STOCK OF NEW POLITICAL
ALIGNMENT


Classified By: AIT Director Douglas Paal, Reasons: 1.4 (B,D)


1. (C) Summary: MOFA officials are nervous over a string of
recent political transitions in Latin America. Over the last
13 months, 6 of these countries -- Panama El Salvador, the
Dominican Republic, Haiti, Guatemala, and Paraguay -- have
seen new governments come to power. Taiwan is adjusting its
political and economic carrots to ensure the new governments
remain committed to recognizing Taipei over Beijing. MOFA
officials are particularly concerned over its relationship
with the new Torrijos government in Panama, despite
assurances from Panama that it has no intention to
immediately review its diplomatic ties with Taiwan. Taipei
is also worried about Beijing's recent use of economic
pressure to squeeze Paraguay multi-laterally. In the
Caribbean, Taiwan initially feared government changes in
Haiti and the Dominican Republic, but relations with the new
governments there appear to be firmer than expected. End
summary.

Panama Remains Primary Concern
--------------


2. (C) With the inauguration of President Torrijos on
September 1, Taiwan is facing uncertainty from arguably its
most important diplomatic partner. MOFA Deputy
Director-General for Latin America, Wu Chin-mu, told AIT that
despite President Chen Shui-bian's recent visit to Panama,
Taipei believes the situation in Panama remains clouded. To
illustrate his concerns, Wu pointed out that for the first
time in four years, Panama did not support Taiwan's recent
bid to become a member of the UN on the grounds that the new
government is reevaluating all foreign policies of the
previous administration. Wu expressed skepticism over this
line, and said he feared that this might be a sign of things
to come.


3. (C) Wu said that during his September visit, President
Chen did receive assurances that, at least for the time
being, Panama will continue to recognize Taipei over Beijing.
Wu lamented, however, that the new Torrijos administration
reportedly criticized its predecessor during the election
campaign for being too close to Taiwan and pledged that it
will increase ties to the PRC. Wu noted that the PRC already
has approximately $300 million worth in commercial ties with
Panama and is looking to increase PRC business activities
there. Wu had little to offer on what Taiwan was planning to
do to counter the PRC's lobby campaign. He specifically
dismissed the idea of working multi-laterally with other
diplomatic relationships in Central America, such as
Guatemala and Nicaragua, assessing that such nations have
little or no influence with the Panamanian Government. Wu
did say that Taiwan would like to work more closely with the
USG to promote Taiwan's position in Panama.

Paraguay Also a Focus for the PRC
--------------


4. (C) Wu told AIT that the PRC is also working on several
levels to convince Paraguay to de-recognize Taiwan. For
instance, Wu noted that Beijing has invited Paraguayan
legislators and businessmen to the PRC for talks on expanding
commercial and official ties. In addition, Wu asserted that
the PRC is undertaking a public relations campaign in
Paraguay to influence popular views over its policy toward
Taiwan. More troubling, Wu noted, was the PRC's attempts to
use other countries in the region to pressure Paraguay. Wu
asserted that during his recent visit to Beijing, Brazilian
President Luiz Inacio Lula promised to encourage Paraguay to
switch diplomatic recognition to Beijing in exchange for
trade concessions from the PRC. However, Wu remarked that
because of recent PRC-Brazil trade disputes, Brasilia has
informed Beijing that Brazil will cease pressuring Paraguay
to de-recognize Taiwan.


5. (C) Despite alleged PRC-Brazil trade friction, Wu said
that Taiwan is still concerned over Paraguay's ability to
resist the PRC's regional approach. He noted that the PRC is
currently linking free trade negotiations with MERCOSUR to
the Taiwan issue. Beijing has reportedly warned that
Paraguay's ties to Taiwan are an obstacle to finalizing any
PRC-MERCOSUR free trade framework. Regional pressures
notwithstanding, Wu said Asuncion has recently assured Taiwan
that they will not change their recognition. Moreover, Wu
pointed out that the PRC doesn't even have a trade office in
Paraguay and there are almost no economic ties between the
two governments.

Caribbean Appears Safe
--------------


6. (C) Wu was relatively less concerned about Taiwan's
diplomatic relationships with the Dominican Republic and
Haiti. Wu said Taiwan was pleased with the election of
Dominican Republic President Leonel Fernandez. Wu said that
President Fernandez is very pro-Taiwan and has visited the
island several times and almost considers it his second home.
President Fernandez has assured Taiwan that he will never
offer diplomatic relations to Beijing, but has said he will
try to seek to improve business ties with the PRC.
Concerning Haiti, Wu admitted that Taipei had been one of the
few international supporters of the Aristide government.
After Aristide was removed from power, Taiwan officials were
worried they would lose recognition with the new government.
However, Wu told AIT that the new government in Haiti has
assured Taiwan that they will not change their recognition at
this time. Wu noted that Taiwan has various commercial and
humanitarian aid projects in Haiti and assessed that the
Haitian Government is presently satisfied with the state of
the relationship.

Chile as APEC Chair
--------------


7. (C) Wu noted that Taiwan has a strong economic
relationship with Chile and is satisfied with Santiago's
handling of APEC this year. According to Wu, in terms of
administration and protocol, everything is being conducted
exactly how it was by Thailand last year. Wu said that Chile
has good relations with both Taiwan and the PRC and it
usually tries to balance its approach. He noted that in
order not to anger Beijing but still give a high level of
respect to Taiwan, Chile recently sent its Foreign Minister
to visit Taiwan, but Santiago characterized the visit as an
APEC mission rather than an official visit.

Strategic Challenge
--------------


8. (C) Stepping back from the current state of play, Wu
lamented that the PRC's growing economic power and political
influence in the world is causing a lot of problems for
Taiwan. Wu noted that the PRC is leveraging its new-found
clout to redouble its efforts to erode Taiwan's last bastions
of international diplomatic influence. However, Wu assessed
that Beijing's strategy will be counter-productive to its
real core interests since the more the PRC tries to
strong-arm Taiwan abroad, the stronger pro-independence
sentiment will become at home.

Comment
--------------


9. (C) Growing public and media scrutiny is making it
increasingly difficult for Taipei to match Beijing's "check
book diplomacy" campaign in Latin America. The media is
becoming especially critical of under-the-table payments to
political parties and foreign leaders, long a mainstay of
Taiwan's diplomatic strategy. There are already rumors
circulating Taipei that Nicaragua's current President,
Enrique Bolanos, is looking for the same sorts of direct
payments from Taiwan previously paid to his predecessor,
Arnoldo Aleman, who is under house arrest for money
laundering and embezzlement. With Beijing apparently now
willing to use sticks as well as carrots to win over Taiwan's
dwindling diplomatic relationships, Taipei's options are
looking increasingly bleak.
PAAL