TAIWAN STRUGGLING TO COUNTER THE PRC IN LATIN

S E C R E T SECTION 01 OF 02 TAIPEI 001263

SIPDIS

SIPDIS

DEPARTMENT PASS TO WHA

E.O. 12958: DECL: 4/10/2016
TAGS: CR NC PM PGOV PREL TW XR
SUBJECT: TAIWAN STRUGGLING TO COUNTER THE PRC IN LATIN
AMERICA

REF: A. TAIPEI 0427


B. TAIPEI 0781

C. TAIPEI 4282 (2005)

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


1. (C) Summary: Taiwan officials continue to worry about
Taipei's diplomatic standing in Latin America and Beijing's
growing influence in the region. Taipei is particularly
concerned that Panama, Costa Rica, and Nicaragua might soon
switch recognition from Taipei to Beijing. In an effort to
counter the PRC, Taiwan has adopted a new foreign aid program
aimed at Latin America, and President Chen Shui-bian plans to
visit Costa Rica and Paraguay in May. As Beijing's economic
clout continues to grow, however, it appears there is only so
much Taiwan can do before some nations begin to switch ties
to the PRC. End summary.

Taiwan Worried About Central America
--------------


2. (S) Ministry of Foreign Affairs (MOFA) officials'
immediate concern is Panama (ref A and B). In two recent
meetings with AIT, Foreign Minister James Huang pointed to
Panama-PRC meetings in Madrid in mid-February as evidence of
Panama's strong interest in exploring the possibility of
switching recognition. He added that MOFA assesses
Panamanian President Torrijos is inclined to maintain
diplomatic ties with Taiwan, while expanding commercial ties
with Beijing, but Vice-President and Foreign Minister Samuel
Lewis is pressuring Torrijos to derecognize Taiwan. MOFA
Director-General for Latin America Jai-son Ko also expressed
concern about Panama; he told AIT that, despite Panamanian
assurances, Taipei is not confident of its standing and does
not know "what is going to happen."


3. (C) Ko also raised concerns about Nicaragua and Costa
Rica. In Nicaragua, he said, there are far too many
candidates opposing pro-PRC Sandinista candidate Daniel
Ortega in the Fall presidential election, which could split
the vote and allow Ortega to win the presidency outright. Ko
expressed hope that the US will consider using its influence
to encourage the anti-Sandinista candidates to cooperate to
find an effective strategy to oppose Ortega.


4. (C) In Costa Rica, Ko feared that president-elect Oscar
Arias Sanchez will move San Jose closer to Beijing. Within a
year, he speculated, Sanchez might move to exchange trade
offices with China, as a precursor to formal ties.
Separately, Costa Rica's Ambassador to Taiwan, Dr. Oscar
Alvarez, told AIT that he expects one of Sanchez's priorities
after assuming office will be to expand ties with Beijing and
invest in the PRC market. In the past, Alvarez noted,
Sanchez has expressed his displeasure with Costa Rica's ties
to Taiwan. Alvarez told AIT that many Costa Rican government
officials believe Sanchez is preparing to switch ties to
Beijing when the time is right.

New Aid Strategy to Counter the PRC
--------------


5. (C) Taiwan's US $250 million "Co-Prosperity Project" is a
new foreign policy strategy aimed at bolstering Taiwan's
standing in Latin America and countering Beijing's growing
economic ties (ref C). MOFA's Ko told AIT that the
initiative came from President Chen's personal
dissatisfaction with Taipei's existing aid programs and
Beijing's efforts to use its growing economy to pressure
Taiwan. The program will promote Taiwan investment and
encourage long-term development rather than rely on Taipei's
traditional infrastructure and humanitarian assistance
projects. Taiwan officials from several government
ministries jointly developed the plan with Taiwan business
leaders and recipient governments in Latin America. The plan
relies on persuading Taiwan businesses, some government
controlled but some not, to make major new investments in the
region. MOFA officials are worried, however, that it will be
difficult to convince Taiwan businesses to invest in the
region because most firms see more potential in the PRC and
Southeast Asia.

Chen's Latin America Trip
--------------


6. (C) President Chen will visit Latin America in May to
bolster Taiwan's standing with its diplomatic partners.
MOFA's Ko told AIT that Chen plans to attend the inauguration
of Costa Rica president-elect Oscar Arias Sanchez as well as
meet with other Central American leaders. Chen hopes to
convince the leaders that Taiwan is a more reliable
diplomatic partner than Beijing. Chen then plans to travel
to Paraguay, Taiwan's only remaining partner in South
America. Ko said he was confident in Taipei's relationship
with Asuncion and noted the primary purpose of the visit is
to fulfill Chen's pledge to travel to each of Taiwan's allies
during his presidency. Ko added that Chen hopes to visit the
Southern Cone to counter the PRC's frequent visits to the
region. Ko also confirmed that Chen wanted to visit Haiti,
but for now Haiti is not on the itinerary. Separately,
Legislative Yuan (LY) Speaker Wang Jin-pyng has been invited
to attend the June 26 Regional United Parliamentary World
Summit in Guatemala.

Comment: The Clock is Ticking
--------------


7. (C) Latin America is Taiwan's most important region in
terms of the number of formal diplomatic relations, but based
on AIT's meetings with MOFA officials, it appears that Taipei
does not have a solid grasp on the status of its diplomatic
ties with governments in the region. There is a sense of
pessimism that Taipei is barely hanging on - even with a new
aid strategy. As Latin American governments face additional
pressure to improve living standards and create jobs, the
PRC's economy and, consequently, official ties with Beijing,
have become increasingly appealing to Latin American
businesses and the general populace. If this trend
continues, it is only a matter of time before Taiwan will
begin lose some of its partners to the PRC.
YOUNG