TAIWAN'S FOREIGN AID TO CENTRAL AMERICA

C O N F I D E N T I A L AIT TAIPEI 000646 SIPDIS SIPDIS E.O. 12958: DECL: 03/01/2016 TAGS: PREL PGOV ASEC XR TW SUBJECT: TAIWAN'S FOREIGN AID TO CENTRAL AMERICA (C-AL5-01181) REF: A. STATE 6661 ¶B. STATE 4292 Classified By: AIT Acting Director David J. Keegan, Reason 1.4 (b/d) ¶1. (C) The following is AIT's response to questions posed in C-AL5-01181 (Ref A) on the status of Taiwan's "Co-Prosperity" project and general foreign aid policies for Central America. ¶2. (C) Funding for Taiwan's US $250 million "Co-Prosperity" project (Ref B) is still under consideration in the Legislative Yuan (LY). Taiwan Ministry of Foreign Affairs (MOFA) Director-General for Latin America Jai-son Ko told AIT that the aid program has been delayed by Pan-Blue LY members because the initiative came from President Chen Shui-bian. However, LY Speaker Wang Jin-pyng is committed to the project, and MOFA is hopeful the LY will approve the funds by May. Ko explained that Wang became a strong proponent of the initiative after his February visit to Honduras where Central American leaders told Wang they supported the program. ¶3. (C) Ko told AIT that President Chen himself believes the Co-Prosperity program is an effective mechanism to advance Taiwan's standing with its diplomatic partners and counter Beijing while at the same time providing meaningful investment that will bolster employment and economic development in the region. Ko added that Central American leaders themselves asked for more direct investment and job creation programs instead of traditional humanitarian assistance. MOFA officials told AIT that Beijing recently sponsored a trade exposition for Cental America in Guangzhou. The PRC invited business and industry leaders from the region and offered a variety of economic incentives and promised to invest heavily in certain sectors. ¶4. (C) MOFA officials contend the Co-Prosperity project is not like previous controversial "check-book diplomacy" aid programs because funds will be provided to Taiwanese firms for investment, not to Central American governments. As such, there have been few calls by the opposition to block the measure on the grounds of check book diplomacy. Furthermore, Ko noted the foreign aid controversies of 2004 are a distant memory. Recent sentiment in the LY, he explained, has been supportive of foreign aid projects because law makers are concerned over the PRC's progress in persuading some of Taiwan's diplomatic partners to switch ties. ¶5. (C) Comment: After the foreign aid controversies in 2004, a taskforce was proposed to monitor Taiwan's aid programs to ensure accountability. The taskforce was never approved by the LY, and the Presidential Office and MOFA pledged to reform foreign aid policies. AIT's examination of Taipei's foreign aid programs and discussions with MOFA, however, indicate it is still relatively easy for the government to conceal how it distributes aid. While the LY is responsible for approving the foreign aid budget, once the money has been approved, there are few accounting mechanisms in place to verify if money earmarked for specific programs was actually used for those purposes. In order to establish more transparent foreign aid guidelines, Legislator Bi-khim Hsiao co-sponsored legislation that will establish more comprehensive accounting regulations. The legislation is in the preliminary stages of cross-party negotiation in the LY. KEEGAN