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  • Sarah Bores

China’s Influence Grows In Latin America As Honduras Cuts Diplomatic Ties With Taiwan

Image courtesy of PBS

Honduras has officially cut diplomatic ties with Taipei and established relations with Beijing, formally recognizing the existence of only “One China.” This marks the ninth diplomatic ally lost by Taipei to Beijing since Tsai Ing-wen has taken office, leaving only 13 sovereign states still recognizing Taiwan including Belize, Paraguay, and Guatemala. Island nations in the Caribbean and South Pacific make up a majority of Taipei’s remaining partners and continue to face pressure from Beijing to switch ties. Taiwan Foreign Minister Joseph Wu responded to the Castro government’s change in ties as a dismissal of their “longstanding assistance and relations” and that the Taiwanese government feels “pained and regretful.” Taiwanese President Tsai Ing-Wen continued, adding that Taipei refuses to engage in a “meaningless contest of dollar diplomacy with China” in response to China’s pledges of economic assistance in attempts to sway Latin American nations to switch ties and further suppress Taiwan’s global presence.

President Castro of Honduras announced that this decision came in an effort to “diversify bilateral ties” and as a sign to “expand the borders freely in concert with the nations of the world.” However, reports suggest that Beijing had offered Honduras significant sums of aid in exchange for establishing formal diplomatic ties. Chinese Foreign Ministry spokesman Wang Wenbin dismissed this report calling it “preposterous.” In response, Taiwanese Foreign Minister Joseph Wu highlighted that Beijing had been consistently trying to persuade Tegucigalpa to switch ties. Honduras had asked Taipei for $2.45 billion to build a hospital and dam and then compared the competing aid packages presented by both Beijing and Taipei. Honduras’ move to change its diplomatic recognition came following negotiations with China over building a hydroelectric dam in Honduras with the help of Chinese aid and resources. This follows the trend of China utilizing the prospect of investments and access to financial markets as a bargaining chip in luring Taiwan’s diplomatic partners, often nations in Latin America, to switch ties. Taiwan’s opposition Kuomintang (KMT) party is frustrated with Honduras’ betrayal of the 82-year friendship between Honduras and Taiwan, going on to blame the ruling Democratic Progressive party for what it deems as a “wrong and radical foreign policy” that has led to the severing of relations with “nine countries in the past seven years.”

Historically, relations between Taiwan and Honduras date back to 1941. Their 1980s diplomatic relationship revolved highly around the geopolitics of the Cold War, as both nations shared a deep opposition to communism. Their early relationship was based primarily on trade, developmental assistance allocated to Honduras and diplomatic support pledged to Taiwan. In 2012, Honduran President Sosa expressed interest in opening relations with both Taiwan and mainland China. This prompted concern within both nations, and Honduras ultimately maintained relations with Taipei and not Beijing. In 2017, President Juan Hernandez ordered the military to crack down on protesters accusing him of electoral fraud, leading to international condemnation. Amidst this, Tsai Ing-wen still congratulated Hernandez, illustrating the priority of maintaining the diplomatic ally over calling out Hernandez’s clear human rights violations. Hernandez still remarked that China’s growing global presence served as a potential opportunity, exemplifying the complex and contradictory history of Taiwanese-Honduran relations.

Beijing has allocated billions of dollars towards its “One China” policy amidst a battle for diplomatic recognition. The Chinese government claims Taiwan as part of its territory and demands that it be brought under its control. Although Beijing refuses contact with countries maintaining formal ties with Taiwan, Taiwan still maintains robust informal ties with many nations including the US. US-Sino tensions have intensified as Washington continues to tighten ties with Taipei and Xi Jinping continues to develop China’s military capacity to win a fight over Taiwan. Beijing has fought to limit Taipei’s global presence and fought to sway its diplomatic partners by sidelining it from agencies such as the World Health Organization and placing immense pressure on Latin American nations to maintain support for Taiwan.

This new diplomatic relationship between Honduras and China will allow Honduras to be eligible for Chinese development aid, an exciting prospect for a developing nation. Although Honduras will be able to utilize Chinese resources for development, the nation is not guaranteed prosperity as China’s international business ventures have had mixed success. In Latin America, Chinese-funded construction projects caused significant issues through incurred deficits.

In Uganda, over 500 construction defects were identified in a Chinese-built 183-megawatt hydropower plant on the Nile River, which had broken down frequently since the operation’s implementation in 2019. China International Water & Electric Corp. constructed the Isimba Hydro Power Plant and failed to build a floating boom to protect the dam from weeds and debris, causing clogged turbines and power outages. Flaws in Chinese-funded projects have also come to light in Pakistan, as the Neelum-Jhelum hydroelectric plant had to be shut down following the detection of cracks in a tunnel transporting water through a mountain to drive a turbine. Tauseef Farooqui, head of the country’s electricity regulator, shared that he was concerned the tunnel would collapse just four years after becoming operational. In a nation already plagued by rising energy prices, that would be catastrophic. Hydropower plants, according to the World Bank, should have operating lives of up to 100 years, but the closing of this plant after just four years ended up costing Pakistan $44 million a month. Similar issues occurred in another Chinese-built hydropower plant, the Karuma Hydro Power Project, which is three years behind schedule due to construction defects and cracked walls. The Chinese contractor, Sinohydro Corp, reportedly installed faulty cables and switches as well as a fire extinguishing system that required replacing. The Ugandan government already had to begin paying back the $1.44 billion borrowed from the Export-Import Bank of China for backing the project despite the plant still not being operational. The history of flawed and incomplete business ventures in Latin America at the hands of Chinese promises of aid suggests how this decision, based primarily on economic incentives, could turn out to be not as lucrative or beneficial for Honduras as previously understood. Political analyst Graco Perez in Honduras warns that Beijing’s narrative highlights the benefits of the new relationship but this is “all going to be illusory” as other nations who have established such relations did not “turn out to be what had been offered.”

This switch in ties could entangle Honduras and Taiwan deeper into a “geopolitical tug-of-war” as Sino-American tensions continue to rise. Directly following the action Taiwan closed its embassy in Tegucigalpa in addition to its consulate in San Pedro Sula. Taiwan withdrew its ambassador from Honduras as well as all technical staff involved in aid development in the Latin American nation. Taiwan’s Defense Ministry is working to bring back Taiwanese military personnel based in Honduras and is sending back Honduran military students studying in Taiwan. This decision came right before President Tsai’s 10-day visit to Guatemala and Belize, two remaining diplomatic partners of Taiwan, in addition to stops in New York and Los Angeles where she will meet with Republican House Speaker Kevin McCarthy. This could further intensify US-Sino relations and pose international ramifications as China continues to grow as a global power and Taiwan suffers more diplomatic losses.

Honduras switching diplomatic relations comes following a growing trend of Chinese influence in Latin America: Nicaragua, El Salvador, Panama, the Dominican Republic, and Costa Rica have all recently recognized Beijing. The broadening of China’s presence has occurred through their expansive financing infrastructure projects in the region as well as promises of access to their lucrative markets. Over the past decade, China has given over a trillion dollars in international loans as part of Beijing’s Belt and Road Initiative to develop economic trade and grow Chinese influence globally. Beijing has become the largest government lender to the developing world, with loans equivalent to nearly all other governments combined. These loans have received criticism for contributing to debt crises in Sri Lanka and Zambia as many countries are unable to repay the loans given. Other projects have been exposed for not matching the infrastructure needs of the nation or causing environmental issues. Ecuador has served as the “Beijing’s push” into Latin America as Quito has accessed more loans than any country other than Venezuela and Brazil. As nations switch to recognize Beijing, they are met with offers for millions in development funds, such as the Solomon Islands in 2019 which were offered $8.5 million. Nations still aligned with Taiwan are facing immense pressure resisting offers from Beijing. For example, Paraguay President Benitez called on Taiwan to invest $1 billion in Paraguay so it could continue to withstand pressure to abandon the alliance. This portrays the growth in Chinese economic ties to the region as trade between China and Latin America increased from $12 billion to $315 billion between 2000-2020 and is expected to double by 2035. China serves as the largest investor in Peru’s mining sector, controlling seven of the largest mines and 100% of Peru’s iron production. In addition to involvement in trade and the mining sector, between 2009 and 2019, Beijing also sold over $615 million in arms to the Chavez/Maduro regime in Venezuela. China has also been heavily involved in Haiti, sending military training exercises and supplies to law enforcement including anti-riot gear and military vehicles.

This shift in diplomatic relations and China’s growing bid for power on the global stage is ushering in a new global power dynamic. China’s desire to expand its sphere of influence in the Southern Hemisphere revolves heavily around aid, investment, and trade. Through soft power, and a bolstering of cultural and educational ties, Beijing has developed stronger relationships and placed itself in the position to serve as a viable partner to nations over the US or European states. Evan Ellis, a research professor of Latin American Studies, says how the growth of Chinese-Latin American ties is bolstering the authoritarian governments in Cuba, Nicaragua, and Venezuela. China serves as an “incubator of populism” in these regimes. This begs the question of how the continued growth of China’s presence in Latin America could influence domestic governments in the region as well as the world stage as a whole.

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