How long will Paraguay stay friends with Taiwan?

Simon Shen July 28, 2017 09:21

The recent state visit to Taiwan by President Horacio Cartes of Paraguay was indeed a timely and much-needed shot in the arm for President Tsai Ing-wen, who had suffered a major diplomatic setback when Panama, Taiwan’s long-standing ally, announced that it decided to break off ties with Taipei in favor of Beijing last month.

At present, Paraguay is the only country in South America that has no formal diplomatic relations with Beijing. And along with the Vatican, the two countries have become Taipei’s last remaining influential allies.

Unlike most of Taipei’s current allies, which had already established diplomatic ties with it long before the Kuomintang regime under Chiang Kai-shek lost the civil war and fled to Taiwan in 1949, Paraguay in fact established formal diplomatic relations with Taiwan in 1957.

And the reason Paraguay chose the Republic of China (ROC) over the People’s Republic of China (PRC) is simple: during the 1950s Paraguay was ruled by a right-wing pro-US government that was strictly anti-communist, and regarded its communist neighbors such as Cuba as archenemies.

It is against this unique historical and geopolitical background that Paraguay refused to recognize Beijing in favor of Taipei in 1957 despite the fact that the Communist Party of China had already conquered the entire mainland at that time.

And over the past 60 years, Paraguay benefited from its anti-communist alliance with Taiwan: Not only has Taipei helped equip the Paraguayan army and train its officers, but it has also offered tens of millions of dollars in economic aid to its South American friend.

Taiwan’s economic aid program to Paraguay has lasted uninterrupted since the 1950s until the present. For instance, former Taiwanese president Ma Ying-jeou approved a US$71 million housing aid package to the country shortly before his departure from office last year.

As a result, many former Paraguayan military leaders who were trained by their Taiwanese friends when they were still young soldiers, and who are now holding key government positions in Paraguay, still remain strongly attached to Taipei even to this day, hence the country’s steadfast friendship with Taiwan.

Even when Taipei lost its seat in the United Nations to Beijing in 1976 and became completely isolated in the international community, Paraguay firmly stood by its Taiwanese friends and did not switch sides.

Perhaps little known is that today in Asuncion, the capital city of Paraguay, there is still a main avenue named after Chiang Kai-shek, where his bronze statue is still standing tall.

However, despite their seemingly unshakable friendship, at least for now, there are looming challenges to the bilateral relations between Taiwan and Paraguay, and these challenges are mainly posed by Beijing’s rapidly growing economic and political influence in South America.

For example, in recent years, cash-flush entrepreneurs from China have already replaced Taiwanese companies and become one of Paraguay’s major foreign investors.

And Chinese investors, many of whom have official backgrounds, have been working aggressively to build their connections in the Paraguayan political circles and try to befriend key political figures in the country.

On the other hand, while the volume of trade between Taiwan and Paraguay only stood at less than US$50 million in 2016, the trade volume between Paraguay and China already jumped to a whopping US$1.1billion during the same period.

Given Beijing’s growing economic influence and deep pockets, it is capable of buying the friendship of Paraguay if the latter is willing to accept the offer, and there is absolutely nothing Taipei can do about that.

This article appeared in the Hong Kong Economic Journal on July 27

Translation by Alan Lee

[Chinese version 中文版]

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Simon Shen

Associate professor and director of Global Studies Programme, Faculty of Social Science, at the Chinese University of Hong Kong; Lead Writer (Global) at the Hong Kong Economic Journal