Caribbean Weighs Allegiance to Taiwan vs. China

By Bert Wilkinson Reprint | | Print |

GEORGETOWN, Guyana, Jul 5 2012 (IPS) - As Caribbean leaders meet in St. Lucia this week, they are focusing on a series of routine issues affecting the region, including problems with the smooth operation of the single trading market.

But those from the smaller eastern group of islands are also likely to raise the implications of a recent U.S. court ruling that has much to do with the protracted battle between mainland China and Taiwan for diplomatic recognition in the Caribbean Community bloc.

In the past week, Justice Harold Baer of the Southern District Court of New York handed tiny Grenada a major victory over Taiwan when he ruled that the Asian economic giant had no right to garnish the overseas earnings of Grenada to win back payments for development loans when Taiwan and Grenada were seemingly inseparable diplomatic buddies.

Grenada was one of only 23 countries around the world that had recognised Taiwan as a full sovereign state rather than as a breakaway rebel province of China, as Beijing has long maintained.

But the two had a bitter falling out after the previous government switched allegiance to China and booted out Taiwan, humiliating Taipei and setting off a chain of events that nearly led to full-scale economic hardships for Grenada.

Once China replaced Taiwan as Grenada’s Asian darling, Taiwan began to demand immediate repayment of about 30 million dollars in concession loans to the island, clearly as punishment for being chased off the 344 sq km island of 110,000 north of Trinidad, even though authorities there had asked for time to work out a payment plan. Taiwan basically said no, and demanded its money in a shorter period.

Lawyers for Grenada took the matter to a U.S. court because Taiwan had successfully begun to garnish the island’s earnings from cruise lines and air travel, putting the money – nearly a million dollars – into its own account rather than Grenada’s.

Wazir Mohamed, an assistant professor of sociology at the University of Indiana, East, says there are lessons for small island nations caught in the middle of a tug-of-war by developed nations to win hearts and minds in the region and access minerals and other natural resources.

“There are a lot of implications for small states being caught in a new type of cold War in the world today,” he told IPS. “Nothing has changed in the way capital is being used by the West and nations like China. It is a new form of colonialism, but the only thing different to the past is that this new form is now being implemented and effected much more rapidly than in the past using capital that is very, very mobile.

“Caribbean nations have to be careful about being caught in the middle of these geopolitical fights involving other nations,” said the Caribbean-born Mohamed.

For Grenada, cruise lines were on the verge of scrubbing St. George’s as a port of call because they were uncomfortable being in the middle of a nasty diplomatic row that forced them to take the side of one over the other.

In his ruling, Justice Baer called the actions of Taiwan inimical to the island’s development since Grenada depends on money from the cruise and airline sectors “as a source of revenue for carrying out public functions”.

As widely expected, lawyers for Taiwan say they will appeal. For now, Grenadian authorities are breathing easier even as they prepare for the very likely round two legal process.

For other nations, like summit host St. Lucia, the issue is of prime importance and one to monitor very closely as it could also face similar problems. The last government in 2007 had ironically kicked out China and replaced it with Taiwan, upending the decision of another administration in the late 1990s.

China has so far not retaliated by demanding back its money, notably funding for a new sports stadium, hospital and buildings in St. Lucia’s industrial zone, but has condemned local officials outright for its diplomatic expulsion.

“We have been very careful about making this decision, and now that we have taken it, we do not expect the Chinese will love us any more for it,” said then Foreign Minister Rufus George Bousquet. “But we expect that they will conduct themselves in a manner that is acceptable to our government.”

Bousquet’s government has since lost power. The new administration of Prime Minister Kenny Anthony has already spoken to both sides, but for now is playing it safe and has remained loyal to Taiwan even though it had chosen China in a previous period in office. Bousquet had also said the policy back then was to deal with which donor was willing to give more.

Once Taiwan departed Grenada, China moved in to win hearts, funding a national sports stadium and donating generously to reconstruction efforts in the aftermath of Hurricane Ivan, which devastated the island in September 2004.

Other Caribbean trade bloc nations that recognise Taiwan over China include Haiti, St. Kitts, St. Vincent, Belize and now St. Lucia, even though the official policy of the bloc is for a “one China Policy”.

The Grenada issue is not an official agenda item for leaders when they meet in the main of two annual summits from Wednesday to Friday, but officials all say the court ruling has implications and lessons for island nations still caught between China and Taiwan for diplomatic recognition.

For now it appears that mainland China is winning. Last September, many regional leaders travelled to Trinidad for the China-Caricom forum where the delegation from Beijing offered up to one billion dollars in soft loans to fund projects throughout the region.

Some states, like bloc headquarters Guyana, signed on quickly by proposing various projects for funding, but Taiwan does not have that luxury as its diplomatic and aid outreach is confined only to those with which it has formal diplomatic relations.