As tensions between the United States and China continue to escalate after the United States shot down an alleged Chinese spy balloon with very expensive missiles, the increased presence of China in Latin America has once again become a point of concern in Washington.
The head of the United States Southern Command, Army General Laura Richardson, characterized that the investment by China in infrastructure in Latin America as an “encroachment” on their territory. As she claimed during a January 2023 speech to the Atlantic Council, “We see the tentacles of the PRC [People’s Republic of China] in our neighborhood.”
But the reality of Chinese investment in Latin America is not what Washington has presented.
“It’s not as ideological as they pretend it to be in Washington,” Bruno Binetti, an analyst with the Washington, D.C.-based think-tank The Dialogue, tells The Progressive.
“[The United States] is trying to bring back the Cold War framework, and I don’t think that’s going to work because for most Latin American countries it is a pragmatic relationship they have with China” Binett says. “It doesn’t have anything to do with ideology. They don’t want to refuse the kind of economic advantages that good relations with China involve.”
Latin America has historically approached global politics with a multipolar view of international relations. Opening diplomatic relations with China has become a key foreign relations campaign issue in elections across the region. This comes especially as the United States has not provided an alternative to Chinese investments.
Over the past two decades, Chinese banks have averaged billions of dollars in funding for projects in Latin America. Yet as Binetti points out, Chinese investments in Latin America slowed in 2019, with no new infrastructure loans made since then.
“There’s a learning process for the Chinese,” he explained. “They lost money in Venezuela and some other countries; They’ve got problems with repayment in Ecuador; some issues in Argentina. So it makes sense for them, rather than base their economic interests with those loans, to act more like normal Western companies.”
He adds, “[China] invests only in projects that make sense, that have chances of success and of profit. They are still players in the region and have been investing, but it’s a more business-driven presence.”
China has also been involved in the installation of 5G communication networks, which offer cheaper infrastructure systems for networks, as Binetti points out, than companies tied to the United States. Even allies of the United States such as Brazil’s ex-president Jair Bolsonaro, who was no fan of China, decided to contract telecom giant Huawei to install 5G networks in his country—just after seeking to ban the company from the country.
Chinese investment in the region, and the access to Chinese markets, has become an issue in elections in the few countries that still maintain relations with Taiwan. An upcoming election in Paraguay, for example, will test the issue of breaking relations with Taiwan and recognizing “One China.”
Paraguay is one of the only fourteen countries that maintain diplomatic relations with Taiwan around the world. As the country prepares for the upcoming presidential election on April 30, the issue of opening relations with China has been taken up by the candidate for the opposition Authentic Radical Liberal Party.
In an interview with Reuters, Paraguayan Opposition presidential candidate Efrain Alegre suggested that if he wins the upcoming election, his administration would sever relations with Taiwan in order to open relations with China
“Paraguay must have relations with China,” Alegre said in the interview. “Our interests in the livestock and grain sectors are currently suffering a major loss. We hold this critical position towards relations with Taiwan because we don’t think we get enough back from this relationship.”
“It doesn’t have anything to do with ideology. They don’t want to refuse the kind of economic advantages that good relations with China involve.”
In contrast, Santiago Pena, presidential candidate of the ruling Colorado Party in Paraguay, has stated that his administration would maintain foreign relations with Taiwan if he is elected. According to Reuters, he exclaimed during a recent visit to Taipei, “Nowadays our countries are much more than friends, they are partners and strategic allies, that share values and the same vision to create a peaceful, democratic, and sustainable world.”
But generally, Taiwan has seen its diplomatic relations in Latin America slowly recede over the last two decades.
Beginning with Costa Rica in 2007, countries in Central America and the Caribbean have opened direct diplomatic relations with China, which has made billions of dollars in investment funds available as part of their “Belt and Road Initiative.”
Other countries in the region have followed Costa Rica in recognizing “one China,” with Panama opening diplomatic relations in 2017, the Dominican Republic in 2018, El Salvador in 2018, and finally Nicaragua in 2021. There were discussions in Guatemala during the administration of Óscar Berger from 2004 to 2008 about opening relations with China, but these efforts were quickly abandoned.
“It was not an auspicious time,” Luis Andres Padilla, a professor at the Guatemalan Rafael Landívar University, tells The Progressive. “It was a time when China’s foreign policy was more oriented towards this idea of the rising of the ‘Sleeping Dragon.’ ”
Since then, Guatemala has grown closer to and remained an outspoken ally of Taiwan.
Yet political candidates in the region who have suggested that they would recognize China’s claims over Taiwan have not always followed through on their campaign promises after taking office.
For example, during the campaign in Honduras, then-candidate Xiomara Castro had suggested that the Central American country would sever ties with Taiwan and recognize “One China.” But upon entering office, the Castro administration decided to maintain relations with Taiwan.
As Paraguay debates the issue of China in its election, Guatemala will likely double down on its relationship with Taiwan in the lead up to its June presidential election.
As the hemisphere moves away from Taiwan, Guatemala remains a steadfast supporter of the increasingly isolated island nation-state. The Central American country is set to host an international “Friends of Taiwan Summit,” which a spokesperson for Guatemala’s Ministry of Foreign Relations tells The Progressive is currently set for May 2023.
“This summit is a demonstration of closeness with the Taiwanese ally,” Padilla says. “In addition to being strategic, it is a way to tell Washington, ‘look, on this issue we are on the same side.’”
China’s Foreign Ministry has already condemned the planned summit.
Taiwan has played a role in investment in infrastructure of the countries that are still their allies, access to higher education, and military defense training. These relationships were built over decades.
But at the heart of the summit is the fact that being among the final allies of Taiwan creates a form of power and influence, and for small countries, this can guarantee that they are heard on the global stage. This is reflected in the findings of research by Tom Long and Francisco Urdinez, which studied Paraguay’s relationship with Taiwan.
“It’s a matter of status for them,” Binetti says. “There are incentives for Paraguay [and Guatemala] to remain in the Taiwanese camp. And that is something they know they will lose the second they start recognizing China.”
He adds, “They benefit from it economically in terms of status. And it gets you attention in Washington, and in Taipei, that you would not get any other way.”