CARTOON: China's Cash for Central American Control

CARTOON: China's Cash for Central American Control

What you need to know

China reportedly agreed to provide more than US$27 billion in financing for a port in El Salvador.

A sleepy backwater port on the southeastern coast of El Salvador has suddenly found itself at the center of the push and pull for global influence between China and the United States.

The facility in question, Port La Union, was barely a strip of concrete until Japan extended the government El Salvador a loan of US$100 million for its development in 2008.

Even now, satellite images suggest the port is barely visited by ships of any kind.

And yet China has reportedly pledged more than US$27 billion to secure control of the port and a special economic zone that will be developed in the surrounding town, securing in return the diplomatic recognition of San Salvador and the further isolation of its former ally, Taiwan.

Foreign Minister Joseph Wu (吳釗燮) explained in his Tuesday statement that a taskforce sent by Taipei to El Salvador had determined that such a financing package constitutes a "high debt risk" that no "responsible government" could possibly take on, hence the breakdown in relations between San Salvador and Taipei.

The fact that China is willing to pay what Wu suggested was an "astronomical" sum is an indication of just how hard a line Beijing is willing to tow on Taiwan.

Taiwanese officials have also suggested El Salvador's government had sought funds to back the re-election of its standing president, Salvador Sánchez Cerén, though no figure has yet been ascribed to this request.

The deal is typical of the dollar diplomacy that China has successfully engaged in over the past two years, and which has so far seen five countries decide to normalize ties with Beijing, the others being, in reverse order, Burkina Faso, the Dominican Republic, Sao Tome and Principe, and Panama.

Taiwanese officials on both sides of the Legislative Yuan are spitting blood over the switch, which was timed to coincide with President Tsai Ing-wen (蔡英文) returning to Taiwan soil after a nine-day diplomatic visit to Paraguay and Belize.

During the tour, Tsai stopped twice in the U.S., notably giving a high-profile speech at the Ronald Reagan Presidential Library in Los Angeles on her outward journey, before becoming the first sitting Taiwan president to visit a U.S. federal facility at NASA's Lyndon B. Johnson Space Center in Houston on the return leg.

China's Communist Party government lodged a vigorous protest with Washington and other governments over the warm welcome proffered to Tsai, whom Beijing views as an illegitimate ruler and advocate of independence for a territory it has claimed as its own since coming to power in 1949.

"China resolutely opposes any country with diplomatic ties with China, including the U.S., having official contacts with Taiwan,” Chinese foreign ministry spokesman Lu Kang said.

In fact, Taiwan has never been ruled by Beijing, and the Tsai administration advocates for the maintenance of the status quo in cross-Strait relations, rather than pushing for formal independence, though articles in the ruling Democratic Progressive Party (DPP)'s charter make clear that the party views Taiwan as a sovereign and independent state.

The timing of the El Salvador switch is surely no coincidence, and can be viewed as a poke in the eye for the U.S. over its feting of Tsai, opening as it does a channel for Chinese influence in what Washington will view as its own backyard.

Beijing may also have military intentions for the port, though this is pure speculation.

In any case, El Salvador's switch piles pressure on Tsai and her ruling DPP government ahead of local elections in November, and opens the door for the opposition Kuomintang party to undermine Tsai on her ability to manage cross-Strait relations.

As for China, project financing under President Xi Jinping's Belt and Road Initiative (BRI) is under scrutiny on a global scale, from high-speed rail projects in Laos and Malaysia to ports in Sri Lanka and Pakistan, and now, it seems, Central America as well.

It remains to be seen whether dishing out such extravagant sums on El Salvador adds to whispers of mounting pressure on Xi over the financing of the BRI, after at least one prominent intellectual argued that China would be better served addressing the issue of poverty at home before it engages in overseas adventurism.

The onus now lies on the U.S. and its allies to make clear to Taiwan's remaining diplomatic partners that there are far-reaching consequences for taking China's money. So far, U.S. officials have said Washington is reviewing its diplomatic relationship with San Salvador, and that the decision to cut ties with Taiwan is "disappointing" and "worrisome."

Read Next: UPDATE: El Salvador Cuts Diplomatic Ties with Taiwan

Editor: David Green (@DavidPeterGreen)

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