Latin America AdvisorCosta Rican President Oscar Arias announced Wednesday that his government has ended diplomatic ties with Taiwan in order to establish relations with China, a move he said was aimed at boosting commercial ties and attracting investment from the fast-growing Asian giant. What is the significance of Costa Rica's decision? Will the remaining Latin American countries that do not have formal diplomatic ties with China follow suit?
Dan Erikson, Senior Associate for US Policy at the Inter-American Dialogue: Costa Rica's break with Taiwan is an event of enormous significance for the intense competition between China and Taiwan in Latin America. The fact that a respected leader like Oscar Arias, who has been highly critical of communist Cuba, would then perform an about-face and recognize communist China means that bar has been lowered to allow other Central American countries to follow suit. Right now, Taiwan has only 24 remaining allies in the world, and 12 are located in Latin America and the Caribbean. But Costa Rica is the first Central American country to break ranks and recognize China. Many of the small, poor countries of Central America and the Caribbean have become ensnared in the cross-strait dispute, with growing pressures on potential 'swing states' that may be on the verge of changing official recognition from Taipei to Beijing. Not all the news is bad for Taiwan, however. In St. Lucia, the election of Sir John Compton in December set off tremors in Beijing, and this pristine island subsequently broke relations with China in favor of Taiwan—but this decision was out of step with broader regional trends. Meanwhile, officials in Washington have yet to fully think through the possible implications for how this intensifying struggle between China and Taiwan may affect US interests in the Hemisphere.
Ottón Solís,of the Citizens Action Party, who finished second behind Arias in Costa Rica's presidential election last year: I fully support President Arias' decision for three reasons. First of all, we have to act according to international law, and according to international law, the country is China ... that has a recognition in the United Nations ... And we are a weak country; we must rest all our defense in any future conflict on international law. So we have to be an example in that field. Second, there are economic reasons. The realities are that China is a big country which is growing very fast and buying a lot from the world. We send about one-sixth of our exports to China, and we are a small, open economy. We depend very much on trade. So we have to look at countries that offer trade opportunities to us. Third, there is a very important issue, and it is the corruption associated in diplomatic relations between Costa Rica and Taiwan. There has been money given out to political parties and to foundations of presidents. There has been money given to the minister of foreign relations in order to ... overpay several dozen civil servants there, who are themselves designing foreign policy. So it is a relationship packed with conflicts. There has been a custom on the part of Taiwan and some Costa Rican journalists, politicians, Congress members, and public officials: they are invited to go to Taiwan. Taiwan spends a lot of money on that, and that has an ugly side to it ... Will [Arias' decision] have an impact on the Latin American countries? I think it will because Costa Rica has a lot of respect on the part of Latin American countries, and we might be a trend-setter on this issue.
Eric Farnsworth,Vice President of the Council of the Americas: It's difficult to fault President Arias for his move, which is essentially a recognition of economic and commercial reality. Having said that, the best way to ensure direct foreign investment would be to pass CAFTA, which remains pending with Costa Rica, the passage of which would draw additional FDI from the United States with all the positive externalities—including corporate social responsibility, respect for labor and the environment, and community engagement—that the US private sector tends to bring with it. All investment is not created equal, as Chinese engagement shows elsewhere around the world.
Republished with permission from the Inter-American Dialogue's daily Latin America Advisor newsletter.