VZCZCXRO8562
PP RUEHGH RUEHROV
DE RUEHIN #1263/01 1002253
ZNY SSSSS ZZH
P 102253Z APR 06
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC PRIORITY 9637
INFO RUEHAC/AMEMBASSY ASUNCION 0066
RUEHBJ/AMEMBASSY BEIJING 5042
RUEHBE/AMEMBASSY BELIZE 0044
RUEHBR/AMEMBASSY BRASILIA 0064
RUEHWN/AMEMBASSY BRIDGETOWN 0053
RUEHBU/AMEMBASSY BUENOS AIRES 0038
RUEHCV/AMEMBASSY CARACAS 0031
RUEHGT/AMEMBASSY GUATEMALA 0109
RUEHMU/AMEMBASSY MANAGUA 0120
RUEHZP/AMEMBASSY PANAMA 0085
RUEHPU/AMEMBASSY PORT AU PRINCE 0082
RUEHSJ/AMEMBASSY SAN JOSE 0118
RUEHSN/AMEMBASSY SAN SALVADOR 0243
RUEHSG/AMEMBASSY SANTIAGO 0054
RUEHDG/AMEMBASSY SANTO DOMINGO 0085
RUEHUL/AMEMBASSY SEOUL 7755
RUEHTG/AMEMBASSY TEGUCIGALPA 0126
RUEHKO/AMEMBASSY TOKYO 7617
RUEHROV/AMEMBASSY VATICAN 0014
RUEHGZ/AMCONSUL GUANGZHOU 9209
RUEHHK/AMCONSUL HONG KONG 6232
RUEHGH/AMCONSUL SHANGHAI 0018
RUEHSH/AMCONSUL SHENYANG 5130
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC
RHHJJAA/JICPAC HONOLULU HI
RUEKJCS/SECDEF WASHINGTON DC

S E C R E T SECTION 01 OF 02 TAIPEI 001263 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT PASS TO WHA 
 
E.O. 12958: DECL: 4/10/2016 
TAGS: CR NC PM PGOV PREL TW XR
SUBJECT: TAIWAN STRUGGLING TO COUNTER THE PRC IN LATIN 
AMERICA 
 
REF: A. TAIPEI 0427 
 
     ¶B. TAIPEI 0781 
     ¶C. TAIPEI 4282 (2005) 
 
Classified By: AIT Deputy Director David J. Keegan, Reason 1.4 (b/d) 
 
¶1. (C) Summary: Taiwan officials continue to worry about 
Taipei's diplomatic standing in Latin America and Beijing's 
growing influence in the region.  Taipei is particularly 
concerned that Panama, Costa Rica, and Nicaragua might soon 
switch recognition from Taipei to Beijing.  In an effort to 
counter the PRC, Taiwan has adopted a new foreign aid program 
aimed at Latin America, and President Chen Shui-bian plans to 
visit Costa Rica and Paraguay in May.  As Beijing's economic 
clout continues to grow, however, it appears there is only so 
much Taiwan can do before some nations begin to switch ties 
to the PRC.  End summary. 
 
Taiwan Worried About Central America 
------------------------------------ 
 
¶2. (S) Ministry of Foreign Affairs (MOFA) officials' 
immediate concern is Panama (ref A and B).  In two recent 
meetings with AIT, Foreign Minister James Huang pointed to 
Panama-PRC meetings in Madrid in mid-February as evidence of 
Panama's strong interest in exploring the possibility of 
switching recognition.  He added that MOFA assesses 
Panamanian President Torrijos is inclined to maintain 
diplomatic ties with Taiwan, while expanding commercial ties 
with Beijing, but Vice-President and Foreign Minister Samuel 
Lewis is pressuring Torrijos to derecognize Taiwan.  MOFA 
Director-General for Latin America Jai-son Ko also expressed 
concern about Panama; he told AIT that, despite Panamanian 
assurances, Taipei is not confident of its standing and does 
not know "what is going to happen." 
 
¶3. (C) Ko also raised concerns about Nicaragua and Costa 
Rica.  In Nicaragua, he said, there are far too many 
candidates opposing pro-PRC Sandinista candidate Daniel 
Ortega in the Fall presidential election, which could split 
the vote and allow Ortega to win the presidency outright.  Ko 
expressed hope that the US will consider using its influence 
to encourage the anti-Sandinista candidates to cooperate to 
find an effective strategy to oppose Ortega. 
 
¶4. (C) In Costa Rica, Ko feared that president-elect Oscar 
Arias Sanchez will move San Jose closer to Beijing.  Within a 
year, he speculated, Sanchez might move to exchange trade 
offices with China, as a precursor to formal ties. 
Separately, Costa Rica's Ambassador to Taiwan, Dr. Oscar 
Alvarez, told AIT that he expects one of Sanchez's priorities 
after assuming office will be to expand ties with Beijing and 
invest in the PRC market.  In the past, Alvarez noted, 
Sanchez has expressed his displeasure with Costa Rica's ties 
to Taiwan.  Alvarez told AIT that many Costa Rican government 
officials believe Sanchez is preparing to switch ties to 
Beijing when the time is right. 
 
New Aid Strategy to Counter the PRC 
----------------------------------- 
 
¶5. (C) Taiwan's US $250 million "Co-Prosperity Project" is a 
new foreign policy strategy aimed at bolstering Taiwan's 
standing in Latin America and countering Beijing's growing 
economic ties (ref C).  MOFA's Ko told AIT that the 
initiative came from President Chen's personal 
dissatisfaction with Taipei's existing aid programs and 
Beijing's efforts to use its growing economy to pressure 
Taiwan.  The program will promote Taiwan investment and 
encourage long-term development rather than rely on Taipei's 
traditional infrastructure and humanitarian assistance 
projects.  Taiwan officials from several government 
ministries jointly developed the plan with Taiwan business 
leaders and recipient governments in Latin America.  The plan 
relies on persuading Taiwan businesses, some government 
controlled but some not, to make major new investments in the 
region.  MOFA officials are worried, however, that it will be 
difficult to convince Taiwan businesses to invest in the 
region because most firms see more potential in the PRC and 
Southeast Asia. 
 
Chen's Latin America Trip 
------------------------- 
 
¶6. (C) President Chen will visit Latin America in May to 
bolster Taiwan's standing with its diplomatic partners. 
MOFA's Ko told AIT that Chen plans to attend the inauguration 
of Costa Rica president-elect Oscar Arias Sanchez as well as 
meet with other Central American leaders.  Chen hopes to 
convince the leaders that Taiwan is a more reliable 
diplomatic partner than Beijing.  Chen then plans to travel 
to Paraguay, Taiwan's only remaining partner in South 
America.  Ko said he was confident in Taipei's relationship 
with Asuncion and noted the primary purpose of the visit is 
to fulfill Chen's pledge to travel to each of Taiwan's allies 
during his presidency.  Ko added that Chen hopes to visit the 
Southern Cone to counter the PRC's frequent visits to the 
region.  Ko also confirmed that Chen wanted to visit Haiti, 
but for now Haiti is not on the itinerary.  Separately, 
Legislative Yuan (LY) Speaker Wang Jin-pyng has been invited 
to attend the June 26 Regional United Parliamentary World 
Summit in Guatemala. 
 
Comment: The Clock is Ticking 
----------------------------- 
 
¶7. (C) Latin America is Taiwan's most important region in 
terms of the number of formal diplomatic relations, but based 
on AIT's meetings with MOFA officials, it appears that Taipei 
does not have a solid grasp on the status of its diplomatic 
ties with governments in the region.  There is a sense of 
pessimism that Taipei is barely hanging on - even with a new 
aid strategy.  As Latin American governments face additional 
pressure to improve living standards and create jobs, the 
PRC's economy and, consequently, official ties with Beijing, 
have become increasingly appealing to Latin American 
businesses and the general populace.  If this trend 
continues, it is only a matter of time before Taiwan will 
begin lose some of its partners to the PRC. 
YOUNG