Paraguay asks Taiwan to invest 1 billion dollars to remain an ally

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Paraguay’s President Mario Abdo Benítez has called on Taiwan to invest $1 billion in his country to help it resist “enormous” pressure to switch diplomatic recognition from rival China.

Most of Taiwan’s remaining diplomatic allies are in Latin America and the Caribbean, but Beijing has been steadily pushing them aside with offers of aid, loans and trade. A change from Paraguay, the largest country by area that still recognizes Taiwan, would be a blow to Taipei.

“We are working with the president of Taiwan. . . so that the people of Paraguay feel the real benefits of the strategic alliance,” Abdo told the Financial Times during a visit to the United States.

“There are more than $6 billion in Taiwanese investment in countries that don’t have diplomatic relations with Taiwan, we want that $1 billion to go to Paraguay,” he said. “It will help us build the argument on the importance of this strategic alliance with Taiwan.”

Taiwan’s foreign ministry said Abdo’s hope of securing $1 billion in Taiwanese investment “would have deep significance for the Taiwan-Paraguay strategic partnership.”

“The government encourages Taiwanese companies to visit the country and explore investment there,” the ministry said in emailed comments.

Panama, El Salvador, the Dominican Republic and Nicaragua have abandoned Taiwan in the past five years, alarming the United States, which wants Taipei to maintain its alliances in the region.

Paraguay is a major global exporter of soybeans and beef, but its relationship with Taiwan, which Beijing claims as part of its territory, has cost it access to the vast Chinese market. This upset the powerful agricultural lobby of the South American nation.

Paraguay’s ties with Taiwan have deprived its soybean farmers access to the huge Chinese market © Jorge Adorno/Reuters

“Imagine what [agricultural] producers say when meat prices go down and they don’t have access to China,” Abdo said. “They ask you, ‘Please, we have to open up to the Chinese market. What does Taiwan give us when we are a country that could sell all of its soy and meat production to China? »

Taiwan has sent two investment delegations to Paraguay this year and a technological university established in the country in 2017 has already educated 400 students.

A study published last year in the journal Foreign Policy Analysis estimated that Paraguay’s alliance with Taiwan cost it the equivalent of 1% of gross domestic product per year in aid and lost investment between 2005 and 2014.” Paraguay has not received anything from China”, according to the authors wrote. “It was not compensated by flows from Taiwan.”

The alliance with Taipei also cost Paraguay access to coronavirus vaccines at a crucial time in the pandemic, when supplies were only available from China. Abdo said he sent his health minister to speak to the Chinese consul in neighboring Brazil at the time.

“You have three options,” he quoted the consul. “You can be Chinese, which you are not, an ally of China, which you are not, or a poor country, which you are not either. These are China’s priorities.

Taiwan’s other main Latin American allies, Guatemala and Honduras, told similar stories. Last year, Honduras said it was considering opening an office in China to ensure access to vaccines, prompting Taiwan to accuse Beijing of using them for political and diplomatic purposes.

The Moderna Covid-19 vaccine is administered in Paraguay in 2021
The Moderna Covid-19 vaccine is being administered in Paraguay in 2021. The country did not receive Chinese vaccines at a crucial time in the pandemic © Norberto Duarte/AFP/Getty Images

Despite vaccine difficulties, Paraguay has proven to be one of the countries best able to deal with Covid-19 thanks to its stability and macroeconomic discipline, according to the World Bank. GDP contracted just 0.8% in 2020 and rebounded 4.2% last year. Abdo said he expected 2.0% growth this year.

Tom Long, a reader in politics at the University of Warwick and author of the study Foreign Policy Analysis, said the alliance with Taiwan has brought benefits to Paraguay amid tensions over other issues between the Colorado party in power of Abdo and the White House.

“On this issue, Paraguay can attract the attention and favor of Taiwan, and of certain personalities in the United States, of a nature that small states do not often receive,” Long said.

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