Identifier
Created
Classification
Origin
04TAIPEI3430
2004-11-01 07:41:00
CONFIDENTIAL
American Institute Taiwan, Taipei
Cable title:  

MOFA ON THE DEFENSIVE OVER CENTRAL AMERICA AID

Tags:  PREL EAID TW 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 003430 

SIPDIS

STATE PASS TO AIT/W AND USAID
AMEMBASSY BEIJING PLS PASS TO AMCONSUL CHENGDU

E.O. 12958: DECL: 11/01/2014
TAGS: PREL EAID TW
SUBJECT: MOFA ON THE DEFENSIVE OVER CENTRAL AMERICA AID

REF: SAN JOSE 02803

Classified By: AIT Deputy Director David J. Keegan, Reason: 1.4 (B/D)

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 003430

SIPDIS

STATE PASS TO AIT/W AND USAID
AMEMBASSY BEIJING PLS PASS TO AMCONSUL CHENGDU

E.O. 12958: DECL: 11/01/2014
TAGS: PREL EAID TW
SUBJECT: MOFA ON THE DEFENSIVE OVER CENTRAL AMERICA AID

REF: SAN JOSE 02803

Classified By: AIT Deputy Director David J. Keegan, Reason: 1.4 (B/D)


1. (C) Summary. Taiwan officials are on the defensive in
the wake of press allegations that MOFA funneled US$1.4
million to former Costa Rican president Miguel Angel
Rodriguez. MOFA officials claim only $400,000 was given to
Costa Rica for training programs and that Rodriguez
apparently misused the funds. Lawmakers have since released
the approximately $40 million in confidential aid for Central
America that had been frozen over the incident, but only if
certain conditions are met by MOFA. The scandal, however, is
not likely to alter the way Taipei disperses aid to Central
America in the immediate term. MOFA and members of the
Legislative Yuan (LY) appear most concerned with how the
incident will affect Taipei's diplomatic battle with Beijing
in the region, rather than whether it signals a need for more
fundamental reform to Taipei's confidential aid procedures.
Officials are adamant that a mechanism be established to
ensure aid to Taiwan's diplomatic nations remains secret.
Adding to Taipei's woes, the government of Nicaragua is also
planning to officially request that Taiwan respond to
allegations that it gave $1.5 million to former President
Aleman. MOFA officials tacitly acknowledge that some
payments were made to Aleman. End summary.

MOFA Denies Payments Went to Rodriguez
--------------


2. (C) MOFA officials assured lawmakers from the LY's
Foreign Affairs Committee that press reports in Costa Rica
that claimed Taiwan funneled $1.4 million in payments over 3
years to former President Rodriguez were completely false.
MOFA Deputy Director General for Latin American Affairs, Wu
Chin-mu, told AIT that MOFA provided a total of $400,000 in
2001 and 2002 for personnel training programs and conferences
in response to a request from the Costa Rican government. Wu
said Rodriguez may well have misused the money for his own
benefit without MOFA's knowledge. Wu said that he knew
nothing about the other $1 million that was reportedly passed
to a Rodriguez affiliated company in Panama. Wu also told
AIT that this was the same explanation that was officially

provided via Taipei's Embassy in San Jose to the Costa Rican
government.

Central American Aid Released With Conditions
--------------


3. (C) After the Rodriguez scandal broke, $40 million in
confidential aid funds for Central America were frozen by the

SIPDIS
LY's Foreign Affairs Committee. The money was only released
by the Foreign Affairs Committee after Foreign Minister Mark
Chen personally agreed to meet certain conditions demanded by
legislators. Bill Sun, a lame duck KMT legislator on the
Foreign Affairs Committee, told AIT that the LY's first
requirement was that MOFA immediately form a multi-agency
task-force comprised of diplomats, financial auditors, and
lawmakers to investigate the Rodriguez allegations and to
evaluate Taiwan's aid programs for Central America. Sun also
said he wanted to confirm that the $1 million had not been
provided to Rodriguez through some other avenue, such as via
the National Security Bureau (NSB). Secondly, Sun said that
MOFA had agreed to hold a video-teleconference with
lawmakers, MOFA officials, and Taiwan's Central American
Ambassadors to determine the best strategy over the next six
months to minimize damage to Taiwan's relationship with its
diplomatic partners. Sun asserted that the task force may
eventually evolve into a policy making group to review
methods for providing aid and safeguards to ensure
confidentiality.

SIPDIS

4. (C) Democratic Progressive Party (DPP) Foreign Affairs
Committee Convener Bi-khim Hsiao told AIT that the recent
revelations were unfortunate, but demonstrated the challenges
Taiwan faces in trying to maintain its dwindling numbers of
formal diplomatic relationships. Hsiao noted that Foreign
Minister Mark Chen and his recent predecessors have all
endorsed the need for more transparency in the way Taiwan
distributes foreign aid, but their enthusiasm has been
tempered by fear of being the one held responsible for
"losing" a diplomatic partner. Hsiao said that a full
disclosure of Taiwan's aid programs may also incite a bidding
war among Taiwan's developing country relations. Hsiao
asserted that the only course open to the DPP government is
to incrementally reform its money-based foreign policy
approach to enhance accountability.

Impact on Diplomatic Relations?
--------------


5. (C) MOFA officials do not believe the scandal will have
any immediate consequences on Taipei's diplomatic standing in
Central America. However, there is concern that in the long
term this could have serious ramifications on Taipei's
competition with Beijing in Latin America. Sun told AIT he
is worried that Taiwan's interests would be jeopardized if
Taipei's Central American partners started to "compare notes"
over how much they each receive from Taiwan. Sun also
expressed concern over the PRC's ability to discover the
amount of aid Taiwan is giving and the manner in which it is
distributed. Wu echoed Sun's comments and expressed dismay
that details of MOFA foreign aid practices had been publicly
revealed. He was particularly concerned that Beijing's
knowledge of Taipei's activities in the region might allow
them to outbid Taipei, as he claimed occurred with Antigua
earlier in the year. Wu added that the PRC is very active in
the region and is trying to steal away Taiwan's diplomatic
relationships.

Et Tu Managua?
--------------


6. (C) Within days of the Costa Rican allegations came
reports that MOFA may have provided payments to the
Nicaraguan former president, Arnoldo Aleman. When asked
about the allegations that $1.5 million had been transferred
to Aleman while he was president, MOFA DDG Wu did not deny
the allegations. Rather, he explained to AIT that Taiwan
faces unique diplomatic challenges and cannot always rely on
traditional forms of diplomacy. Wu refused to say how Taipei
would respond to reported plans by Nicaragua to ask Taipei
for an official explanation over the Aleman affair.

Comment: Will Anything Really Change?
--------------


7. (C) Despite the embarrassment this scandal has caused
Taipei and MOFA, Taiwan shows little inclination in the
short-run to change the way aid is dispersed to Central
America. Under-the-table payments to foreign leaders have
been a mainstay of Taipei's foreign policy for decades.
However, with Beijing becoming increasingly active in the
region and new, potentially less friendly (and less corrupt)
governments in Costa Rica, Nicaragua, and Panama, Taipei has
little margin for error in the diplomatic recognition game.
New administrations in Central America may find that it is
not worth the embarrassment of dealing with Taiwan if these
aid flaps continue, especially if Beijing steps up to the
plate with more attractive above board incentive packages.
Moreover, a growing backlash at home and abroad against the
practice of direct payments to political parties and foreign
leaders also complicates the traditional approach.
PAAL