When the Dominican Republic abruptly terminated relations with Taiwan on May 1, 2018, and granted diplomatic relations with the People’s Republic of China (PRC), it was a sign of the times. China has been on the rise in Latin America both politically and economically, and the numbers increasingly reflect that fact. In 2017, total Chinese trade with Latin America reached $260 billion—up from $10 billion in the year 2000—and foreign direct investment stock similarly exceeded $200 billion. China has recently eclipsed the European Union to become Latin America’s second largest trading partner after the United States, and China is now the single largest trading partner of Brazil, Chile, and Peru. While the United States remains the overall largest trading partner of Latin America, most of this dominance rests on US economic interconnections with Mexico and Central America. This set of relationships has come under extreme duress during the recent efforts to renegotiate the North American Free Trade Agreement (NAFTA), with potential implications for the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA) as well.
Given that the United States has had little success (and, frankly, only intermittent interest) in countering China’s inroads into Latin America and the Caribbean, it is hard to see how Taiwan could do much better. Indeed, for all the recent theatrics surrounding the recent decisions by the Dominican Republic and Panama (in June 2017) to extend diplomatic recognition to China instead of Taiwan, perhaps the most striking fact is that the question of Taiwan continues to be a subject of debate in Latin America at all. After all, the vast majority of countries in the world already recognize Beijing as the capital of China, and Taiwan, despite its energetic efforts to the contrary, has been awkwardly excluded from most major international fora. Setting aside Cuba, which first recognized China in 1960 for obvious ideological reasons, most of the major countries in Latin America had chosen to recognize China instead of Taiwan by the end of the 1970s, including Argentina, Brazil, Mexico, Colombia, Chile, Peru and Venezuela. In this, most were ahead of the United States, which only re-established diplomatic relations with China in 1979.
Yet, four decades later, Taiwan continues to maintain diplomatic relations with 10 countries in Latin America and the Caribbean, which together account for more than half of the 18 states that still have relations with Taiwan. The final ten include five in Central America—Belize, El Salvador, Guatemala, Honduras, and Nicaragua—in addition to the Caribbean states of Haiti, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines, and Paraguay in South America. The ability for Taiwan to maintain this set of relationships in the face of a rising China and a mostly indifferent United States is no small achievement. In fact, in many ways, it defies logic—and is a testament to shrewd Taiwanese diplomacy and the value these countries assign to its foreign assistance, as well as the undeniable power of inertia in shaping government policies in this region of the world. Nevertheless, as the recent moves by the Dominican Republic and Panama demonstrate, the nearly decade-long “diplomatic truce” between China and Taiwan regarding diplomatic recognition has ended. In its place, Taiwan can surely expect more unpleasant phone calls and meetings, and grim-faced flag lowering ceremonies as once vibrant embassies become converted to lower-level diplomatic and trade missions, or are even closed up altogether.
Latin America is across the world from the decades-long struggle the Taiwan Strait, but the diplomatic tussle between Taiwan and China remains a hot button issue in the Caribbean and Central America. Beijing rigorously promotes its ‘‘One-China’’ principle, which means that non-recognition of the Taiwanese government is a prerequisite for conducting formal diplomatic relations with the PRC—in effect forcing other governments to choose between Beijing and Taipei. Although Latin American countries involved in this geopolitical chess match have little individual clout, together they make up the most significant group of states caught in the cross-Strait tug-of-war.
The current diplomatic battles between China and Taiwan in Latin America carry echoes of the previous decade, when similarly tense cross-Strait relations, coupled with a conservative US administration that increased friction in US-Latin American relations, created an environment where several of Taiwan’s long term alliances were disrupted. After nearly a decade of fairly stable alliances, the battle between China and Taiwan in Latin America really began to heat up in 2004, when Dominica defected to China. Grenada followed suit in 2005, but Taiwan struck back in 2007 by wooing the newly-elected government of St. Lucia. Beijing notched a major victory later that year by winning over Costa Rica, which was the first Central American country to recognize China. For China, Costa Rica’s benign image in Washington presented a huge advantage by minimizing US concern about this decision. Its president, Oscar Arias, was a Nobel Prize-winner who supported democracy and free trade. Many observers predicted at the time that the defection of Costa Rica would mark the beginning of a domino effect that will lead all of Central America to forge ties with Beijing over the next decade. Instead, a diplomatic truce between China and Taiwan took hold that led to a decade of relative tranquility on this issue. Indeed, between Costa Rica’s decision to recognize China on June 6, 2007, and Panama’s decision on June 13, 2017, Taiwan had succeeded in maintaining all of its alliances in the Western hemisphere.
Therefore, the Dominican Republic’s decision on May 1 to follow Panama’s lead indicates that the gloves are off for the coming period, and that there will be more rumblings to come. While the precise timing and reasons for the decisions are as yet unknown, the overall trajectory is clear. China is successfully using a combination of aid projects through dollar diplomacy and trade preferences to wean the Caribbean and Central America away from Taiwan. This does not bode well for basic governance questions, especially in era where Latin American leaders find themselves virtually awash in corruption and graft scandals. In the past, Taiwan’s and China’s financial gifts have been at the center of several major corruption scandals throughout Central America, and there is little evidence that this diplomatic dispute will contribute to good governance and transparency in Latin America.
The United States finds itself in an uncomfortable position with respect to the cross-Strait dispute. The official US position is, understandably, that other governments’ decisions to maintain or sever diplomatic relations with Taiwan are for those governments to make. Moreover, since Washington also officially recognizes the PRC, it has little moral authority with which to lobby other governments on Taiwan’s behalf, and seemingly little apparent motivation to do so. In general, the United States has publicly reacted with nonchalance towards the prospect that Taiwan’s hemispheric alliances will continue to unravel. The lone exception to this was the Dominican Republic, where US officials were highly critical of the decision, the timing, and the lack of advance notice that the Dominican government apparently gave to either the United States or Taiwan. However, given that the Dominican Republic quickly moved to patch things up with the United States by adopting a more strident position towards Venezuela in the Organization of American States, it seems safe to say that there will be no lingering effects on the US-Dominican Republic relationship. This strategic ambiguity may suit the United States, but it often leaves officials in Beijing, Taipei, and the capitals of Central America and the Caribbean scratching their heads as they try to divine Washington’s true feelings. In the final analysis, the choice between China and Taiwan will remain a highly charged foreign policy decision for a narrow swathe of vulnerable Latin American countries for many years to come.
China’s emerging role in Latin America and the Caribbean is a new phenomenon that lacks easy historical parallels. On the one hand, China is a strong economic and political partner of the United States, but on the other, China is a non-democratic country that is viewed as a potential rival to US influence across the globe over the long term. Clearly, China is poised to be a major player in the Western Hemisphere for many years to come, irrespective of what actions the United States does or does not take in reaction to Beijing’s growing influence. Therefore, Taiwan can count on sympathy from some sectors in Washington, but not much else. Some members of Congress are likely to remain strongly supportive of Taiwan and denounce new decisions by Latin American countries to extend diplomatic recognition to China. However, Taiwan and its allies would be mistaken to assume that these views will automatically translate into some form of material support for maintaining Taiwan’s standing in the region.
The main point: China’s rise poses urgent political, economic, and security questions for Latin America and the Caribbean. While many countries in the region have obtained substantial economic benefits from trade and investment with China, few are truly satisfied with the current state of their relations. This in part explains Taiwan’s ability to retain a significant number of diplomatic ties in the Caribbean and Central America, even when the current state of geopolitics and the global economy argue for forging ties with China. Taiwan currently faces a moment where the US relations with China and Latin America are subject to new tensions and disruptions, which means that the preserving the diplomatic status quo will be more challenging than ever.