After El Salvador, What Now for Taiwan and Its Central American Allies?

After El Salvador, What Now for Taiwan and Its Central American Allies?
Photo Credit: Reuters / TPG
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El Salvador’s decision to switch diplomatic recognition to Beijing was a pivotal moment in Taiwan’s future. 

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Taiwan is enmeshed in a diplomatic crisis that threatens the stability of Asia.

Just over a decade ago, the entire Central American isthmus recognized Taipei, representing a contiguous bloc of seven countries among a platoon of 25 nations that had yet to buckle to Beijing’s will and endorse the "one China principle," under which Beijing is intent on forcing the world to acquiesce to the view that Taiwan is an inalienable part of its territory.

Now, after Costa Rica broke ties in 2007 and El Salvador followed suit last week, barely more than half the isthmus maintains ties with Taipei, part of a dwindling global group of 16 small countries and the Holy See.

The last two years have seen five countries switch recognition in relatively quick succession, putting Taiwan on a hastened path towards a potential crisis point of "diplomatic zero": a situation in which no global government recognizes Taiwan.

The defections result from a diplomatic war waged by the Chinese Communist Party (CCP) to squeeze President Tsai Ing-wen (蔡英文) and her Democratic Progressive Party (DPP), whose Foreign Minister Joseph Wu (吳釗燮) lambasted San Salvador for being lured by China's "checkbook diplomacy."

The CCP, in its systematic dismantling of Taiwan's diplomatic network, is spurred by its perception that Tsai and her DPP administration favor independence from China. Tsai herself has said that she favors maintaining the status quo in cross-Strait relations, but the credibility of this position is undermined in China's eyes by her track record as a politician, notably as the co-author with former President Lee Teng-hui (李登輝) of the "two state solution" in 1999, which advocated for China and Taiwan to engage in a special "state to state relationship."

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Credit: Reuters / TPG
Then Democratic Progressive Party (DPP) Chairperson and presidential candidate Tsai Ing-wen (L) hugs former Taiwan President Lee Teng-hui during a campaign rally in Banqiao on the outskirts of Taipei Jan. 13, 2012, one day before the presidential election.

Beijing views recent statements from Taiwan Premier William Lai (賴清德) affirming that he is a "political worker for Taiwan independence" as further evidence of the incongruity between Tsai's outward pronouncements and her political beliefs.

Analysts quickly noted that El Salvador's ruling Farabundo Martí National Liberation Front (FMLN) government, heavily favored to lose power in next February's national elections, likely wanted to shift to China while they still had time – a claim denied by San Salvador.

The announcement of the defection coincided with Tsai's return to Taiwan soil after a nine-day diplomatic visit to Belize and Paraguay that included widely publicized stopovers in Los Angeles and Houston. The timing suggests that Beijing was able to stage manage the process to its own ends as a means of publicly punishing Tsai and the U.S. for having the temerity to indulge in such a public show of mutual support.

"Using the return from the region by President Tsai allowed El Salvador's action to undermine the Tsai trip and serve as a "message" to others," Robert Evan Ellis, a research professor of Latin American Studies at the U.S. Army War College Strategic Studies Institute who focuses on Latin America's relationship with China, told The News Lens.

Ties between the U.S. and San Salvador have cooled significantly since the administration of U.S. President Donald Trump opted not to renew "Temporary Protected Status" for some 190,000 Salvadorans who will now be subjected to forced expulsion. In a recent commentary, Prof. Ellis posits that the deteriorating relationship between Washington and San Salvador "may have convinced the FMLN, already seemingly on its way out of power, that it had nothing to lose."

Prof. Ellis told The News Lens that, while he is unsure whether it is possible to 'blame' Trump's rhetoric towards Central America for El Salvador's change, the move underlines "the importance of the strategic value for the US, through our public diplomacy, of maintaining friendships and goodwill throughout the world."

The U.S. establishment reacted to El Salvador's decision with vitriol, including threats by Senator Marco Rubio to agitate for the total cessation of foreign aid – a hardline response which was largely absent when the Dominican Republic dropped Taiwan in May.

"Sending a strong message about the reevaluation of the US Salvadoran relationship, with the implications of impacts for investment in and trade with Salvador, however seemingly combative, does send a strong message to others who may be contemplating such a change," said Prof. Ellis.

The U.S. may also be awakening to its critical role in ensuring Taiwan's retention of its diplomatic allies and potentially, by extension, its existential safety.

Chipping away at the Central American bloc

El Salvador's decision to switch diplomatic recognition represents a significant victory for the CCP and one that has the potential to unhinge what remains the most significant bloc of Taiwanese diplomatic allies.

"The loss of El Salvador is significant because it is one of the three countries, along with Guatemala and Honduras, that make up the Northern Triangle of Central America, which has long been a focus of Taiwan’s engagement with the region," said Daniel P. Ericson, Managing Director and leader at public affairs consultancy Blue Star Strategies, where he manages the Latin America practice.

"At this point, Central America as a whole is a toss up – with Panama, Costa Rica, and now El Salvador favoring mainland China, while Honduras, Guatemala, Nicaragua and Belize still recognize Taiwan. However, it is highly likely that there will be additional defections to China in the coming year."

As of Monday, the foreign ministries of Guatemala, Honduras and Nicaragua had all offered pledges of continued support for Taiwan via their embassies in Taipei. The received wisdom is that Tsai’s recent trip to Belize will have done as much as possible to ensure that the government of Prime Minister Dean Barrow does not waver in the short term.

The last two years have seen five countries switch recognition in relatively quick succession, putting Taiwan on a hastened path towards a potential crisis point of 'diplomatic zero': a situation in which no global government recognizes Taiwan.

Yet the possibility that other Central American governments could follow San Salvador has set in motion a geopolitical chess game with far-reaching consequences, evinced by a robust response from a perturbed U.S. foreign policy establishment anxious to avoid further erosion of its predominance in Latin America.

"This is a decision that affects not just El Salvador, but also the economic health and security of the entire Americas region," reads an Aug. 23 White House press statement. "The El Salvadoran government’s receptiveness to China’s apparent interference in the domestic politics of a Western Hemisphere country is of grave concern to the United States, and will result in a reevaluation of our relationship with El Salvador."

That as yet undefined reevaluation is a warning to other governments to think twice before considering normalizing ties with Beijing and closing their Taiwan embassies – not least because there is a chance of bringing San Salvador back into Taipei’s fold within the next six months.

The leading candidate in El Salvador’s presidential elections, set for Feb. 3 next year, Nayib Bukele of the newly formed Grand Alliance for National Unity, has pledged to reverse current president Salvador Sanchez Ceren’s decision to normalize ties with Beijing.

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Credit: Wikipedia Commons
Nayib Bukele, the current Mayor of San Salvador, established the Grand Alliance for National Unity party after his expulsion from the ruling Farabundo Martí National Liberation Front so he could contest the 2019 presidency.

And Carlos Calleja of the opposition Nationalist Republican Alliance (ARENA) has echoed Taiwan’s Ministry of Foreign Affairs in warning of the dangers of falling lure to China’s checkbook diplomacy – citing Costa Rica as an example – not to mention the risks involved in playing fast and loose with the support of the United States.

These indications do not represent a guarantee, and analysts suggest Bukele is sufficiently savvy to recognize the benefits of deeper commercial ties with China, but still, there is a possibility that El Salvador could become the first country since St. Lucia in 2007 to switch recognition back to Taipei.

There is also reason to believe that the people of El Salvador, and by extension their elected representatives, would welcome such a return, according to Janice Chen, Senior Associate at the Taiwan Democratic Progressive Party Mission in Washington. "Taiwan’s diplomatic relationship with El Salvador had dated back more than eight decades … I think this is a big part of the reason why we are seeing the significant domestic pushback and consternation within El Salvador, triggered by their government’s decision," she told The News Lens in an email.

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Credit: Reuters / TPG
Warships and fighter jets of Chinese People's Liberation Army (PLA) Navy take part in a military display in the South China Sea on April 12, 2018.
'Diplomatic zero': is Taiwan prepared?

Analysts contend that what is at stake is no less than Taiwan’s future, and with it the stability of Asia as a whole – that further diplomatic abandonments would represent a worrying slide towards "diplomatic zero."

"The movement to zero diplomatic allies moves us dangerously close to destabilization in Asia," said Prof. Ellis. "It leaves us at that point where the PRC is most tempted to take actions to resolve the Taiwan issue as an internal Chinese matter, and moves us closer to war-related risks."

That sentiment is echoed by David An, a senior research fellow at the Global Taiwan Institute (GTI) and previously a political-military officer at the State Department under the Obama administration, who warned in a recent GTI paper that "At the current rate with which Beijing is stealing Taiwan’s diplomatic allies, Taipei could reach ‘diplomatic zero’ within five to 10 years."

But there is currency in the idea that Taiwan can afford to lose its allies. An told The News Lens that there is an argument that "Taiwan maintains strong informal diplomatic relations through its TECRO [Taiwan Economic and Cultural Representative Offices] in the United States, Europe, Latin America and throughout the world that function as de facto embassies and consulates, so Taiwan is still connected with almost all countries to successfully perform diplomatic, economic, security work with its informal allies."

'At the current rate with which Beijing is stealing Taiwan’s diplomatic allies, Taipei could reach diplomatic zero within five to 10 years.' – David An

This position has been given weight in the recent past through statements from the likes of former DPP Chairman Hsu Hsin-liang (許信良), now head of the Foundation on Asia-Pacific Peace Studies, a private think tank, suggesting that losing allies like São Tomé and Principe, which switched to Beijing in December 2016, is "not really important" as it frees up budget to be deployed elsewhere.

Ariel P. Chang, a project assistant at the National Democratic Institute, a nonprofit aimed at strengthening global democratic institutions based in Washington DC, suggests this is precisely what the Taiwanese people voted for when they elected a DPP government: "Losing Republic of China allies is one of the many consequences when we are slowly moving away from this old identity," she said, referring to the Tsai administration’s rejection of the 1992 consensus and with it the implication that there is only "one China" and that Taiwan is part of it.

Others fear this line of thinking underestimates the ruthlessness of the CCP’s calculations: "My personal sense as regards informal ties is Taiwan fooling itself about the very serious situation that it is in," said Prof. Ellis. "Formal ties are recognition of diplomatic legitimacy. Official diplomatic relationships are at least one indication that the world cares about the future of a non-PRC Taiwan."

Taiwan’s Presidential Office spokesman Alex Huang (黃重諺) said in an Aug. 24 interview that the Tsai administration has contemplated the possibility of being left with no diplomatic allies and has a strategy in place to deal with this eventuality – though he declined to offer specifics.

Reasoning and Recriminations

Avoiding that eventuality should be top of the DPP government's agenda, and analyzing the root of El Salvador's decision should be an integral part of that process.

There are various competing claims over whom to blame for El Salvador’s decision, but Janice Chen has it right when she says: "What is certain is that Beijing’s attempts to draw the remaining allies away from Taiwan will only continue to intensify … Whether these countries will ultimately find Beijing’s appeal persuasive will likewise depend on the interplay between a complex rubric of external and internal factors."

However, that complex rubric is often oversimplified when debating the causation of diplomatic abandonments within Taiwan.

Foreign Minister Wu and Democratic Progressive party legislator Wang Ding-yu (王定宇) have talked up the idea that the decision of President Ceren, a former guerrilla leader, was motivated purely by money – that his government had fallen victim to China’s "checkbook diplomacy" after failing to squeeze Taiwan for sufficient funds.

Legislator Wang also suggested in a Facebook post that El Salvador had demanded Taiwan provide funds for the development of La Union port in the southeast of the country, which has long been considered a potential economic catalyst for the country, despite having been inactive since initial infrastructure work was completed with the help of a US$100-million investment by Japanese port development companies in the late 2000s.

Wang said El Salvador had asked for US$4 billion to develop La Union’s port and US$23 billion for a special economic zone (SEZ) surrounding it, plus the payment of US$25 million in maintenance costs – costs Foreign Minister Wu called "astronomical" and far beyond the potential returns of the project according to a Taiwanese task force that had reviewed its viability.

Wang’s post implied that the CCP had accepted these terms, and had bundled in additional "gifts" to support President Ceren’s campaign for re-election.

Ceren's FMLN government denied these claims, instead pointing to the wider economic opportunities offered by dealing with China. "We cannot turn our back on the world, ignore that China is the second largest power in the world and the leading export economy on the planet," El Salvador’s presidential spokesman Roberto Lorenzana said. "It is key for our country."

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Credit: Wikipedia Commons
La Union Port in east El Salvador is rich with potential but there are significant obstacles to its further development.

Painting the La Union project as a white elephant that the the CCP was happy to endorse in return for El Salvador’s recognition fits with the Ministry of Foreign Affairs’ agenda of emphasizing the "high degree of debt risk" that comes with opening the door to China – a narrative that is in global play as a result of questions related to China’s financing of the far-reaching Belt and Road Initiative.

Taiwanese officials took much the same line on the Dominican Republic when it severed ties in May, letting it be known that Santo Domingo was tempted to normalize relations with China largely as a result of a US$4 billion incentive package with which Taiwan could not possibly compete.

"Taiwan has been and will continue to be proactive in pointing to the cautionary tales around the world, from other countries whose experience with Chinese financial assistance more often than not end in regret or unfulfilled commitments," said the DPP’s Chen. "That list is lengthening by the day, and encompasses everything from soccer stadiums in Costa Rica that resulted in little or no job creation for local workers, to large-scale infrastructure projects in Southeast Asia that have left sovereign nations saddled with years of debt."

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Credit: Reuters / TPG
Chinese workers construct the new Costa Rican national stadium in San Jose, Nov. 24, 2009. The stadium costing US$83 million dollars was donated by the Chinese government after establishing diplomatic relations with Costa Rica in June 2007.

But the fact is that China is unlikely to have committed to investing in an SEZ which has yet to be approved in El Salvador’s Legislative Assembly.

Moreover, Beijing loses nothing in keeping its wallet closed until after El Salvador’s presidential elections are completed and with them confirmation of whom it will be dealing with for the next five years.

In any case, the opening of China’s cheque book was just one of a confluence of factors influencing the calculus in San Salvador – the city that witnessed the first call for Central American independence from Spain in 1811.

Of more pressing concern was the expectation that the FMLN will lose the presidential race in February following a poor showing in congressional elections in May this year, not to mention its faltering relationship with the United States – which Prof. Ellis writes is evidenced by President Trump's revocation of Temporary Protected Status for Salvadorans in the U.S., "combined with [the administration's] rhetoric toward Latin Americans and other immigrants, expanded deportations, and accompanying uncertainty regarding the future of U.S. funding for programs in the region such as the Alliance for Prosperity."

There has also been speculation that the Chinese government is willing to shoulder financial risk on behalf of its taxpayers because it has aspirations to leverage La Union’s port in a military capacity.

U.S. Ambassador to El Salvador Jean Manes warned of a creeping Chinese economic influence and militarization in the region – notably in July, before El Salvador’s diplomatic switch but just a few days after the FMLN government announced that China had expressed an interest in investing in the proposed SEZ, ironically under openhanded terms that the U.S. itself had helped define.

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CreditL Reuters / TPG
US Ambassador to El Salvador Jean Manes participates in a joint news conference about the cancelation of Temporary Protected Status for about 200,000 Salvadorans in the US, in San Salvador, El Salvador, Jan. 8, 2018.

Such rhetoric is alarmist and likely wide of the mark – in line with the White House’s more hawkish line on China since the ascent of John Bolton as National Security Advisor and Mike Pompeo as Secretary of State, not to mention the earnest opening of trade war hostilities with Beijing that began at much the same time.

Prof. Ellis suggests that absent a global conflict, the PRC has very little incentive to build military bases in Latin America but that is not to say that friendly governments in Latin America would not allow People’s Liberation Army Navy ships to refuel or make port visits in the event of a global conflict.

A more immediate risk is the use of economic dependence as leverage to secure military influence, David An told The News Lens. "China spends hundreds of millions of US dollars to help other countries build large commercial ports and tie up the country in debt to China. It translates economic into political leverage to send in naval vessels such as submarines. Sri Lanka [Hambantota port] is the archetype for this behavior," he said.

The port is thus symbolic of what El Salvador would really lose as a result of inviting in Chinese investment and business interests: control of its economy.

Whereas Taiwan’s aid programs tend to be tailored towards value and employment – "made-to-order garments" in the language President Tsai used during her visit to Belize – China’s approach is more blunt instrument.

"Local companies are replaced by PRC based companies, funds and workers. They build the infrastructure with very little leave behind benefit for the locals," said Prof. Ellis, who has observed China’s approach in both Costa Rica and Panama since they made the switch to Beijing.

"What traditionally happens is you lose a small amount of development aid, but bigger risks are the invasion of the local economy – the market is opened with the promise with expedited access to Chinese markets but you probably won’t end up having El Salvador placing more [of its primary exports] fruit and coffee in China – it just doesn’t have the national branding."

Prof. Ellis also contends that El Salvador was primed and ready to treat with Beijing in part as a result of the creeping influence of PRC companies and representative bodies in the country, which included a small China Council for the Promotion of International Trade office. "Some of the big mistakes over the last 14 years have involved the Taiwanese government [not trying] as hard as it used to to stop the advances of the more subversive things the CCP were doing; informal commercial relationships, friendship committees in states that recognize Taiwan. Those things paved the way for those countries to flip when the time came."

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Credit: AP / TPG
People walk through Daniel Hernandez Park in Santa Tecla, San Salvador, El Salvador, Tuesday, Aug. 21, 2018.

Both Ellis and Blue Star Strategies’ Ericson indicate that many Central American governments had approached the PRC about flipping during the diplomatic truce that spanned the Ma Ying-jeou (馬英九) presidency. "Taiwan miscalculated the importance of maintaining a diplomatic truce with China in order to keep its allies in Latin America, and instead viewed the past decade or so of relative stability as a testament to Taiwan’s diplomatic effectiveness," Ericson said. "In fact, many Latin American countries have been eager to restart relations with China and are seizing this moment of disruption to do so."

El Salvador’s decision was thus the result of a unique set of domestic and international political factors, particularly frustration with the current U.S. government, as well as careful groundwork by China that opened the door to a switch when the stars aligned.

In contrast, the DPP's Chen suggests that the decision was taken in isolation: "There is no indication the decision of the El Salvador government to recognize Beijing was linked in any way by particular policies of the U.S. administration," she wrote in an email. "The way in which the events unfolded have made it patently obvious that the move is attributable solely to persistent Chinese efforts to buy away Taiwan’s remaining allies through unrealistic promises."

Chen is obliged to tow the party line given her position within the DPP, but this narrow focus risks losing sight of salient issues as Taiwan moves forward.

Forward Taiwan?

Now, the fear will be that there are other cards already in China's Central American deck that are just waiting for the right moment to flip.

As for which capital might be next to switch to Beijing, Prof. Ellis said that Honduras is vulnerable to a PRC swoop for many of the same reasons that El Salvador was – economic necessity and frustrations with U.S. immigration policy.

One of the small Caribbean nations could also be contemplating a change – Haiti being particularly susceptible due to the depth of existing PRC economic interests there, he added, while conceding that such crystal ball-gazing is essentially a crap shoot.

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Credit: Reuters / TPG
Taiwan's President Tsai Ing-wen (L) and her Honduran counterpart Juan Orlando Hernandez attend a joint news conference after a private meeting at the Presidential House in Tegucigalpa, Honduras on Jan. 9, 2017.

In the meantime, Taiwan will double down on the DPP government’s strategy of "steadfast diplomacy," which has been operating since 2016. "Taiwan has a rich store of experience to share with similarly situated diplomatic partners, in the form of best practices for growing their economies in a balanced and sustainable way—by investing in human capital, empowering a vibrant SME sector, and expanding trade through integration into a global supply chain," Chen said.

That strategy also appeals to the democratic values shared between Taiwan and its Latin American allies, and the eschewal of dollar diplomacy competition with China.

But the chances of holding onto its allies in Central America for long enough to potentially effect a reversal of recognition in San Salvador is highly dependent on the actions of the United States.

Prof. Ellis suggests that San Salvador, having witnessed the relatively mild ripples of discontent after Dominican Republic’s decision to normalize ties with Beijing in May, was surprised by the vehemence of the U.S. response to its parallel action.

Much depends on how Taiwan’s remaining allies in Central America react to the aggressive U.S. response to El Salvador. The feeling is that this could go either way – acceptance of the leverage the U.S. holds over their domestic economies via remittances sent through immigrants whose status remains in the balance, or a rejection of such perceived bullying entailing a switch to the PRC.

Ericson indicated that the U.S. might consider offering a stronger economic incentive to keep Central American governments onside: "The U.S. cannot effectively deter Taiwan’s allies from moving to China without making a stronger economic case — moral appeals on Taiwan’s behalf are unconvincing when in fact the US also recognizes China and has done so for nearly four decades," he said.

Whether Taiwan has any leverage to influence the U.S. approach as the country heads towards all-consuming midterm elections this November is an open question.

U.S. Senator Cory Gardner met with President Tsai during her stopover in Los Angeles on Aug. 13 to reaffirm support from the United States for Taiwan, and outlined his backing for the Taiwan International Participation Act (TIPA) of 2018, a bipartisan bill Gardner introduced in May that advocates for Taiwan’s inclusion in international organizations like the International Civil Aviation Organization and the World Health Organization.

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Credit: Reuters / TPG
Senator Cory Gardner (C) arrives for a closed senators-only Capitol Hill briefing on election security at the U.S. Capitol in Washington, Aug. 22, 2018.

Gardner's bill is an indication that Taiwan is in play as a means for the U.S. to pressure China amid the continuation of the U.S.-China trade war – though some warn the passage of the TIPA would do little more than provoke further negative reactions from Beijing.

In any case, it is highly doubtful whether Taiwan coming into play in Congress would translate into the kind of joined-up thinking and economic assistance required to make life easier for the country's diplomats in Central America.

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Editor: Nick Aspinwall (@Nick1Aspinwall)

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