05/07/2021, 13.49
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Covid and trade: Asunción resists Chinese 'blackmail' and remains with Taipei

by Silvina Premat

President Benitez: The Chinese have offered us their vaccines in exchange for diplomatic recognition; Beijing denies. Paraguayans lose $ 350 million a year to have state relations with Taiwan. The two countries united by cultural and sentimental ties. A change of government in Asunción could favour China.

Buenos Aires (AsiaNews) - The management of the pandemic and the race for vaccines against Covid-19 has forced Paraguay face the choice of breaking its alliance with Taiwan and strengthening ties with China.

Of the 15 states that recognize Taipei's sovereign status, Paraguay is the only nation from South America, the region that Chinese President Xi Jinping has favoured for the sales and donations of vaccines produced by his country's laboratories.

Paraguayan President Mario Abdo Benítez said Asunción can buy vaccines "from anyone", but will not accept blackmail from anyone. His reference is to what the Chinese categorically deny: The offer of vaccines to the Paraguayan government in exchange for breaking off diplomatic relations with Taiwan. For Communist China, the island is a "rebel" province, to be reunified even by force if necessary.

Although about 20,000 km separate Taiwan from Paraguay, the two peoples are united by strong political and cultural ties. Starting in 1957, Taipei has financed the construction of thousands of social housing and some public buildings, such as the Parliament building in Asunción. Taiwanese authorities have also granted numerous scholarships and grants to help Paraguayan young people and professionals travel to the island.

According to data from the Taipei government, about 4,000 Taiwanese live in Paraguay: they manage investments worth more than 100 million dollars.

According to researchers Francisco Urdinez, of the Pontifical Catholic University of Chile, and Tom Long, of the University of Warwick in the United Kingdom, since 2000 Paraguay has received approximately 70 million US dollars in donations from Taiwan every five years, a figure that has doubled in 2019.

Their academic report published by Foreign Policy Analysis however also reveals that this amount is lower than what Paraguay could have earned if it had had full commercial relations with China: they have termed it the "Taiwan price".

Urdinez and Long have calculated that Asunción loses about 350 million dollars a year for choosing diplomatic ties with Taipei over Beijing.  Added to this are the difficulties in accessing Chinese coronavirus vaccines.

Even if Paraguayan exporters manage to get their products to China through commercial triangulations with Argentina, Uruguay or some Asian countries, the result is far from those that could be obtained thanks to direct relations with Beijing. The numbers interest Paraguay most are those of trade balances: between 2016 and 2020 Asunción recorded a surplus of 129.8 million dollars with Taiwan and a deficit of 16.3 billion dollars with China.

Thus the big question is why Paraguay is still loyal to Taiwan. "Because there are cultural, even sentimental ties between the two peoples, and also because politicians receive funds that they can use at their discretion, without being accountable to anyone," Urdinez told AsiaNews. He added that problems in obtaining vaccines have catapulted the issue of relations with Taiwan into the internal political debate.

The expert predicts that Asunción will not break off relations with Taiwan, at least as long as it is ruled by the Colorado party, to which President Benitez belongs, with a mandate until 2023. Urdinez also explains that “many diplomats linked to the ruling party see China as a sort of communist 'executioner'”.

According to the academician, they believe recognizing Beijing, would make Paraguay just one of the many countries lining up to obtain economic benefits. On the contrary, they see Taiwan as a strategic ally, and know that "if they pick up the phone, the Taiwanese are always ready to listen to them".

The issue is also discussed in Paraguayan civil society, says Urdinez: "For example, the lobby of soybean producers and that of farmers welcome the change of recognition from Taiwan to China, because this would further open the Chinese market for their products". The researcher concludes that such a diplomatic transition will be "inevitable" with the next government.

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