Taiwan’s Future in Latin America and the Caribbean

The Latin America and Caribbean (LAC) region is not immune to events currently taking place in East Asia. In October, China will hold its 20th National Party Congress, at which top leader Xi Jinping is expected to secure a third term in office. Additionally, Xi will likely be crowned the “People’s Leader,” a title unseen in China since the time of Mao Zedong. Already, China’s foreign policy has grown dangerously assertive; after the Party Congress coronates Xi, and following a year of COVID-related economic stagnation and Russia’s war in Ukraine, as well as worries that its power may be peaking, China will be even more audacious.

An ever-bolder China will center its foreign policy efforts on the Indo-Pacific, the South China Sea, and perhaps most importantly, Taiwan. Daily incursions into Taiwan’s air defense identification zone, massive cyberattacks, and economic coercion are just recent examples. But policymakers fretting exclusively about these hotspots are missing the bigger picture. An unbridled Xi has broader ambitions and will likely step up his efforts to isolate Taiwan diplomatically and economically. The Western Hemisphere is ground zero and Taiwan will need the United States to formulate a strategy that ensures Taiwan maintains its status quo in LAC.

Taiwan and LAC: A Symbiotic Relationship

LAC’s importance for Taiwan’s place and survival in the international system is without question. Of Taiwan’s 14 diplomatic allies, 8 are located in the Americas – Paraguay in South America, Guatemala and Honduras in Central America, and Haiti, Belize, St. Vincent and the Grenadines, St. Kitts and Nevis, and Saint Lucia in the Caribbean Community (CARICOM). Taiwan has diplomatic relations with almost one-quarter of all countries in the Americas, helping it to maintain a toehold in the global system. Political leaders in Taiwan’s allies routinely advocate for the country’s inclusion in international institutions, such as the United Nations and the World Health Organization, and serve as secondary mouthpiece s during crisis moments.

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For Taiwan’s allies, there is also a benefit to maintaining relations. Taiwan’s presence in LAC spans more than 60 years. Some countries, such as St. Vincent and the Grenadines and St. Kitts and Nevis, have held diplomatic relations with Taiwan since these countries declared independence. Therefore, even with the external benefits that China can provide upon switching diplomatic recognition, political leaders would have to break with a decades-old status quo and burn significant domestic political capital to justify a change in relations.

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Beyond the longevity of the relationships, there are two key benefits of maintaining relations with Taiwan. First, compared to China and other great powers, Taiwan’s allies rank higher on the foreign policy hierarchy for Taiwan than they would for China. China’s foreign policy ambitions are global in scope, and smaller. Often forgotten LAC countries only benefit from ad-hoc engagement, investment, and aid. By contrast, Taiwan has more time for its 14 official allies, which ensures more consistent engagement. For instance, Taiwan is present and armed with assistance after most natural disasters and economic shocks. In the case of LAC countries, this is particularly important as these countries were disproportionately impacted by the COVID-19 pandemic, and as a region, LAC is considered the second most disaster-prone in the world.

Second, most of Taiwan’s LAC allies have small populations and markets. For Taiwan, this works to its benefit. The absorptive capacity of small countries, especially CARICOM members, is severely limited. Therefore, small amounts of aid and trade can really pack a punch. After the volcanic eruption of La Soufriere on St. Vincent in 2021, Taiwan donated $300,000, orchestrated a clean-up of volcanic ash that provided almost 400 jobs to Vincentians, and donated $50,000 to the country to help purchase monitoring equipment to track the volcano’s subsequent activity. While this amount of money and aid would be insignificant to countries with much larger populations, such as Brazil and Mexico, for St. Vincent and the Grenadines, with an estimated population of just over 110,000 people, Taiwan’s efforts are impactful and competitive vis-à-vis what China could provide.

Despite the manifest benefits of maintaining relations with Taiwan, the temptation of switching to China is ever-present. During the pandemic, China’s promise of COVID-19 vaccines to Paraguay in a moment of global shortages raised the alarm of whether Taiwan’s only ally in South America would remain in its corner. The prospect of donations was enticing and seemed to mirror past Chinese advances to erstwhile Taiwanese allies, including Panama and the Dominican Republic. And as disasters and challenges continue to mount, whether it is another pandemic or a natural disaster, more avenues for Chinese advances will open.

Given China’s promise of immediate aid and investment, usually coupled with media attention, opposition groups seeking to win upcoming elections might start conversations with China to give them a leg up in their promises to prospective voters. Further, recognizing China could expand the foreign policy options for many of these countries, especially when considering the feeling of neglect many feel toward the United States. Working with China gives these forgotten countries another great power with which to engage and balance their own relations with the United States.

In many ways, the Americas are the final frontier for Taiwan, with these countries, relative to Taiwan’s other allies in the Pacific and Africa, holding more political and economic clout on regional and global stages. And recent U.S. activity, including House Speaker Nancy Pelosi’s high-profile visit and strengthening of diplomatic relations, can become a catalyst for China to seek a more assertive posture in limiting Taiwan’s footprint in the Americas. Thus, as China-U.S. and China-Taiwan relations grow more combative, LAC should see more attention from all sides.

China’s Efforts

China’s efforts to lure countries in LAC away from Taiwan are likely to reach a fevered pitch in the wake of U.S. activity (and several presidential statements) that Xi and the Chinese Communist Party interpret as attempts to alter the status quo around Taiwan. Worse, China’s efforts will come at a time of great fragility in LAC. The COVID-19 pandemic ravaged LAC’s health systems, increased inequality, and scrambled its politics. For Taiwan’s allies, particularly CARICOM countries, the pandemic, climate change, and rising food and energy prices are severely and simultaneously sapping their economic vitality. Perhaps most propitiously for Xi and the CCP, the pandemic contributed to the downfall of establishment parties and ushered in an era of anti-establishment presidencies and even fringe coalitions willing to form closer ties to the CCP. Since the onset of the pandemic, leadership in three of Taiwan’s allies changed hands (excluding Haiti).

Furthermore, if the past is any indication of the future, the region’s current leftist turn could prove fertile soil for China’s efforts. If, as polls currently indicate, former president Luiz Inácio “Lula” da Silva wins Brazil’s presidential election in October, LAC’s seven most populous countries will be governed by leftist presidents. During the mid-2000s, a constellation of leftist presidents, known as the “Pink Tide,” drew close to China, mostly exporting the region’s vast commodities. In turn, China helped leftist leaders consolidate domestic coalitions, on which they spent lavishly, deepening social programs, and expanding the role of the state. Today, nostalgia for those halcyon times drives much of the left’s desire to turn back the clock.

Today’s hodgepodge of leftist presidents faces the Herculean task of rebuilding LAC’s economies, education and health systems, and security in the wake of the pandemic’s devastation. Many LAC countries risk acute fiscal crisis, having expanded spending during the pandemic to shore up social safety nets. In the context of fiscal shortfalls and a need to rein in social programs, a familiar window for China is opening. During the pandemic, China capitalized on the region’s call for COVID-19 vaccines. In many ways, China learned the value of responding to the immediate needs of LAC countries via disaster assistance and accompanied media spectacles without having to invest long-term in the region. For China, these were low-cost efforts with significant impact. And as the region looks to put a bandage on emerging economic and social crises, with a potential global recession on the horizon, China may again see value in similar strategies in the post-pandemic period.

With few alternatives and the tantalizing prospect of being able to hold together domestic political coalitions that would otherwise not countenance cuts to social programs, some LAC countries may be hard-pressed to say no. Lula has already indicated that if he returns to the presidency, Brazil-China relations will grow closer; Peru’s president Pedro Castillo has prioritized China-Peru relations since his early days in office. Indeed, the stakes are high since keeping China at a healthy distance may also imply immediate governance crises.

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Even LAC’s few right-leaning governments have drawn closer to China – though less out of conviction than a perception that the United States is distracted and largely absent from the region. For instance, Ecuador’s Guillermo Lasso and Uruguay’s Luis Lacalle Pou have begun negotiations on a trade deal with China. Compounding matters for governments disposed to work with the U.S. over China is the fact that the Biden administration’s signature trade-related initiative – the Americas Partnership for Economic Prosperity, unveiled at the Summit of the Americas – prioritizes countries that have existing trade agreements with the U.S. and offers nothing to those, such as Ecuador and Uruguay, which do not.

While China sees close relations with LAC as key to isolating Taiwan, the CCP must also approach those countries that still recognize the island diplomatically. China often arrives with a sizable goodie bag featuring promises of greater economic engagement, infrastructure development, and political benefits for ruling parties and occasionally co-opted elites. Within LAC, 21 countries are now part of China’s Belt and Road Initiative – and more are flirting with the idea of accession. Further, when persuasion falls short in LAC, the CCP has proven itself capable of significant coercion. For instance, when Paraguay, Taiwan’s only formal ally in South America, found itself in the throes of the pandemic, Beijing purportedly conditioned its offer of vaccines on ending formal relations with Taiwan.

The Beginning of a Strategy

It is in the United States’ best interest to help Taiwan maintain its status quo in LAC. Great power competition is rising, and the poles of power are becoming more regionally focused. Before looking West, China is intent on securing its interests in its own neighborhood. And Russia’s invasion of Ukraine and regional re-positioning in the European Union and Africa, alongside shortened supply chains, means that the United States must also start to look closer home. In the past, expansive U.S. foreign policy ambitions have relegated LAC to the outskirts of U.S. interests and attention. But now, as the United States looks to compete with China across the international system, maintaining Taiwan’s presence in the hemisphere should not be an afterthought.

Therefore, the United States should pursue a strategy to help Taiwan hang onto its allies. While Taiwan’s engagement remains strong, the country faces an uphill battle. At a material and financial level, Taiwan cannot compete with Chinese lending and investment. It is not the amount of aid and investment desired that is increasing but the frequency at which it is needed. Most of Taiwan’s allies have energy, technology, and other industries struggling to get off the ground, compounded by frequent climate events in a disaster-prone region. Chinese resources will outmatch Taiwan’s. Further, Taiwan’s geographic distance from the Americas makes trips to the region difficult and communication between governments and companies challenging because of the time difference. Most importantly, Taiwan has all the disadvantages of being a small state without any of the benefits, including using the platforms afforded by international organizations to advocate for its national interest and having a diverse set of foreign relations.

In all these areas of disadvantage, the United States can partner with Taiwan to punch above its weight. This should be a priority because supporting Taiwan has benefits for the region, too. First, the United States should consider matching aid, loans, and assistance from Taiwan to its allies. Doing so increases the economic clout of the Taiwan relationship and will help lessen the burden on political leaders who feel forced to switch allegiances to China because of limited access to financial resources.

Second, political rhetoric, especially from the United States matters. When Taiwan visits its allies and vice versa, verbal and material support from U.S. officials should follow. A U.S. delegation sent to Honduras shortly after President Xiomara Castro was elected is a recent example of how U.S. attention and counteroffers can dissuade LAC leaders from switching allegiances. Despite the decline of U.S. attention to LAC, many citizens in countries allied with Taiwan still hold a favorable view of the United States. A closer partnership would tether diplomatic relations with Taiwan to that of relations with the United States, which can bring greater attention to countries that feel forgotten.

Finally, the United States should create a permanent space that empowers the Taiwanese government, companies, and civil society organizations to show the utility and benefits of maintaining relations. An annual forum between the United States, Taiwan, and its allies in the Americas can serve this purpose. The benefits would be twofold. First, Taiwan would have an annual space to meet collectively with its allies with U.S. backing. On the other hand, for these LAC countries, it would provide them a space to meet with U.S. leadership – something many of them are unable to do outside of ad hoc global and regional events, such as the United Nations General Assembly and the Summit of the Americas.

Taiwan’s final stand to remain a part of the international system may well depend on the longevity of its relationships with LAC. Taiwan’s influence alone is at a disadvantage; however, together with the U.S., both form a formidable partnership – one that can shore up Taiwan’s place globally and help carry LAC’s prosperity through to the end of the decade.