Honduras’ abandonment of Taiwan sparks bigger geopolitical concerns

Flags of Honduras and Taiwan are seen at the Republic of China Square in Tegucigalpa, March 15, 2023.

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Honduras’ decision to cut diplomatic ties with Taiwan in favor of China is another sign of China’s growing influence in Latin America.

For decades, the Asian superpower has poured billions of dollars into investments and infrastructure projects in the region. Now, with geopolitical tensions rising between China and the Biden administration, that spending has paid off.

The Honduras decision is the second foreign policy coup in a week by China, which last week brokered a deal between Iran and Saudi Arabia to restore diplomatic ties.

Now, only 13 countries recognize Taiwan. But some of the few remaining countries in Latin America, such as Paraguay and Guatemala, pledged on Wednesday to continue supporting Taiwan.

Honduran Foreign Minister Enrique Reina told The Associated Press on Wednesday that Hondurans were “grateful” for their past relationship with Taiwan, but that their economic ties to China ultimately prompted their government to sever ties.

“These are political decisions. The world has been moving in this direction,” Rayner said. “This is a complex decision, we understand, but Honduras’ foreign policy should seek to benefit the people. We believe this step will benefit the country.”

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The Central American country has followed in the footsteps of El Salvador, Nicaragua, Panama and the Dominican Republic in turning its back on Taiwan.

Honduras’ announcement on Tuesday was a blow to the Biden administration, which has tried unsuccessfully to persuade countries in the region to align with Taiwan. Taiwan, a U.S. ally, is pushing for sovereignty even as Chinese President Xi Jinping insists the island is firmly under his control.

In that sense, Tuesday’s announcement also shows that the U.S. government is “losing grip” on Latin America, said David Castellon-Kerrigan, a professor of China-related studies at Colombia’s Estenardo University.

“For a country like Honduras, not recognizing the government in Beijing would be a missed opportunity,” Castrillon-Kerrigan said. The U.S. is “certainly losing influence everywhere, especially economically, but also diplomatically, politically and culturally.”

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It keeps the island’s number of allies dwindling. Reina told the Associated Press that the Biden administration “must understand and respect” the needs and decisions of Honduras.

But some countries, such as Paraguay and Guatemala, remain staunchly behind Taiwan. Guatemalan officials reiterated that the government “recognizes Taiwan as an independent country with democratic values”.

Over the past two decades, China has slowly carved out a space for itself in Latin America by investing heavily in the region, investing in major infrastructure, energy and space projects.

Between 2005 and 2020, China invested more than $130 billion in Latin America, according to the U.S. Institute of Peace. Trade between China and the region is also surging and is expected to reach more than $700 billion by 2035.

This investment has translated into increased power for China and a growing number of allies.

In Honduras, the Chinese government has invested about US$300 million to build a hydroelectric dam project in central Honduras, which will be built by Sinohydro.

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Meanwhile, in many countries, the U.S. government has yet to get involved in projects of a similar scale.

While many see the investment as a positive step for countries that have often struggled to raise funds for development, some, such as June Teufel, a professor of political science at the University of Miami, worry about possible long-term knock-on effects of rising Chinese power.

China is using this newfound influence as a “diplomatic weapon,” Teufel said.

In many countries in Africa and Latin America, Chinese investments have been hurt by mounting debt in developing countries. In many cases, infrastructure projects can only be repaired by Chinese companies, Teufel said, at a higher cost.

“It’s kind of like what a drug dealer would say to a potential client, the first dose is free,” Teufel said. “It makes another country abandon Taiwan, something it has wanted to do for a long time, and strips Taiwan of all remaining allies.”

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