US embassy cable - 04TAIPEI3094

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 003094 
 
SIPDIS 
 
STATE AIT/W 
 
E.O. 12958: DECL: 10/03/2014 
TAGS: PREL, PGOV, CH, TW, Cross Strait Politics 
SUBJECT: LATIN AMERICA: TAIWAN TAKES STOCK OF NEW POLITICAL 
ALIGNMENT 
 
 
Classified By: AIT Director Douglas Paal, Reasons: 1.4 (B,D) 
 
1.  (C) Summary: MOFA officials are nervous over a string of 
recent political transitions in Latin America.  Over the last 
13 months, 6 of these countries -- Panama El Salvador, the 
Dominican Republic, Haiti, Guatemala, and Paraguay -- have 
seen new governments come to power.  Taiwan is adjusting its 
political and economic carrots to ensure the new governments 
remain committed to recognizing Taipei over Beijing.  MOFA 
officials are particularly concerned over its relationship 
with the new Torrijos government in Panama, despite 
assurances from Panama that it has no intention to 
immediately review its diplomatic ties with Taiwan.  Taipei 
is also worried about Beijing's recent use of economic 
pressure to squeeze Paraguay multi-laterally.  In the 
Caribbean, Taiwan initially feared government changes in 
Haiti and the Dominican Republic, but relations with the new 
governments there appear to be firmer than expected.  End 
summary. 
 
Panama Remains Primary Concern 
------------------------------ 
 
2. (C) With the inauguration of President Torrijos on 
September 1, Taiwan is facing uncertainty from arguably its 
most important diplomatic partner.  MOFA Deputy 
Director-General for Latin America, Wu Chin-mu, told AIT that 
despite President Chen Shui-bian's recent visit to Panama, 
Taipei believes the situation in Panama remains clouded.  To 
illustrate his concerns, Wu pointed out that for the first 
time in four years, Panama did not support Taiwan's recent 
bid to become a member of the UN on the grounds that the new 
government is reevaluating all foreign policies of the 
previous administration.  Wu expressed skepticism over this 
line, and said he feared that this might be a sign of things 
to come. 
 
3. (C) Wu said that during his September visit, President 
Chen did receive assurances that, at least for the time 
being, Panama will continue to recognize Taipei over Beijing. 
 Wu lamented, however, that the new Torrijos administration 
reportedly criticized its predecessor during the election 
campaign for being too close to Taiwan and pledged that it 
will increase ties to the PRC.  Wu noted that the PRC already 
has approximately $300 million worth in commercial ties with 
Panama and is looking to increase PRC business activities 
there.  Wu had little to offer on what Taiwan was planning to 
do to counter the PRC's lobby campaign.  He specifically 
dismissed the idea of working multi-laterally with other 
diplomatic relationships in Central America, such as 
Guatemala and Nicaragua, assessing that such nations have 
little or no influence with the Panamanian Government.  Wu 
did say that Taiwan would like to work more closely with the 
USG to promote Taiwan's position in Panama. 
 
Paraguay Also a Focus for the PRC 
--------------------------------- 
 
4. (C) Wu told AIT that the PRC is also working on several 
levels to convince Paraguay to de-recognize Taiwan.  For 
instance, Wu noted that Beijing has invited Paraguayan 
legislators and businessmen to the PRC for talks on expanding 
commercial and official ties.  In addition, Wu asserted that 
the PRC is undertaking a public relations campaign in 
Paraguay to influence popular views over its policy toward 
Taiwan.  More troubling, Wu noted, was the PRC's attempts to 
use other countries in the region to pressure Paraguay.  Wu 
asserted that during his recent visit to Beijing, Brazilian 
President Luiz Inacio Lula promised to encourage Paraguay to 
switch diplomatic recognition to Beijing in exchange for 
trade concessions from the PRC.  However, Wu remarked that 
because of recent PRC-Brazil trade disputes, Brasilia has 
informed Beijing that Brazil will cease pressuring Paraguay 
to de-recognize Taiwan. 
 
5. (C) Despite alleged PRC-Brazil trade friction, Wu said 
that Taiwan is still concerned over Paraguay's ability to 
resist the PRC's regional approach.  He noted that the PRC is 
currently linking free trade negotiations with MERCOSUR to 
the Taiwan issue.  Beijing has reportedly warned that 
Paraguay's ties to Taiwan are an obstacle to finalizing any 
PRC-MERCOSUR free trade framework.  Regional pressures 
notwithstanding, Wu said Asuncion has recently assured Taiwan 
that they will not change their recognition.  Moreover, Wu 
pointed out that the PRC doesn't even have a trade office in 
Paraguay and there are almost no economic ties between the 
two governments. 
 
Caribbean Appears Safe 
---------------------- 
 
6. (C) Wu was relatively less concerned about Taiwan's 
diplomatic relationships with the Dominican Republic and 
Haiti.  Wu said Taiwan was pleased with the election of 
Dominican Republic President Leonel Fernandez.  Wu said that 
President Fernandez is very pro-Taiwan and has visited the 
island several times and almost considers it his second home. 
 President Fernandez has assured Taiwan that he will never 
offer diplomatic relations to Beijing, but has said he will 
try to seek to improve business ties with the PRC. 
Concerning Haiti, Wu admitted that Taipei had been one of the 
few international supporters of the Aristide government. 
After Aristide was removed from power, Taiwan officials were 
worried they would lose recognition with the new government. 
However, Wu told AIT that the new government in Haiti has 
assured Taiwan that they will not change their recognition at 
this time.  Wu noted that Taiwan has various commercial and 
humanitarian aid projects in Haiti and assessed that the 
Haitian Government is presently satisfied with the state of 
the relationship. 
 
Chile as APEC Chair 
------------------- 
 
7. (C) Wu noted that Taiwan has a strong economic 
relationship with Chile and is satisfied with Santiago's 
handling of APEC this year.  According to Wu, in terms of 
administration and protocol, everything is being conducted 
exactly how it was by Thailand last year.  Wu said that Chile 
has good relations with both Taiwan and the PRC and it 
usually tries to balance its approach.  He noted that in 
order not to anger Beijing but still give a high level of 
respect to Taiwan, Chile recently sent its Foreign Minister 
to visit Taiwan, but Santiago characterized the visit as an 
APEC mission rather than an official visit. 
 
Strategic Challenge 
------------------- 
 
8. (C) Stepping back from the current state of play, Wu 
lamented that the PRC's growing economic power and political 
influence in the world is causing a lot of problems for 
Taiwan.  Wu noted that the PRC is leveraging its new-found 
clout to redouble its efforts to erode Taiwan's last bastions 
of international diplomatic influence.  However, Wu assessed 
that Beijing's strategy will be counter-productive to its 
real core interests since the more the PRC tries to 
strong-arm Taiwan abroad, the stronger pro-independence 
sentiment will become at home. 
 
Comment 
------- 
 
9. (C) Growing public and media scrutiny is making it 
increasingly difficult for Taipei to match Beijing's "check 
book diplomacy" campaign in Latin America.  The media is 
becoming especially critical of under-the-table payments to 
political parties and foreign leaders, long a mainstay of 
Taiwan's diplomatic strategy.  There are already rumors 
circulating Taipei that Nicaragua's current President, 
Enrique Bolanos, is looking for the same sorts of direct 
payments from Taiwan previously paid to his predecessor, 
Arnoldo Aleman, who is under house arrest for money 
laundering and embezzlement.  With Beijing apparently now 
willing to use sticks as well as carrots to win over Taiwan's 
dwindling diplomatic relationships, Taipei's options are 
looking increasingly bleak. 
PAAL