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