Taiwan Squeezes Grenada on Debt

The consequences of "Checkbook diplomacy" are still reverberating in the Caribbean, where indebted nations struggle with retaliation from the Taiwan government for switching to China....

After a string of bad economic setbacks – including devastating hits by hurricanes Ivan and Emily in 2004 and 2005 – Grenada stopped paying back some $28 million in loans it received from Taiwan, according to court documents. A judge in New York, who has jurisdiction under terms of the loans, ruled Grenada owes $25.9 million in outstanding principal and interest to Taiwan, and that Taiwan's Export-Import Bank could go after the money via the US legal system.

Now, the money airlines and cruise ship operators previously paid to Grenada in landing and docking fees is going to pay off the loans, sapping the country of funds to keep its air and sea ports running. Virgin Atlantic, Delta, and British Airways recently began paying into a court-established escrow account instead of the Grenadian ports authority.

.......

The Thomas administration says Taiwan’s position is, in part, retribution for the way the two countries split, but that decision was made by the previous Grenadian administration.

Taiwan has called in its loans because Grenada dumped Taiwan in favor of China. Interesting, the switch in 2004 was triggered by the typhoon, and a letter surfaced which claimed that Beijing had agreed to pay off the debt to Taiwan. However, the money was never transferred, it is claimed....

Grenada moved with speed after the passage of Hurricane Ivan in September 2004 to break ties with Taiwan and recognize Mainland China in the face of a more lucrative offer of aid from Beijing.

THE NEW TODAY has obtained the copy of a letter dated November 10, 2004 in which the then NNP administration was engaged in negotiations with emissaries of Mainland China for Beijing to take over the debt repayments with the Republic of China on Taiwan.

The letter was prepared by Richardson Andrews, the Special Advisor to Prime Minister Mitchell to head of the Keppel Foundation, the group that was negotiating the talks aimed at getting St. George's to recognise Beijing and to sever ties with Taiwan as part of the One-China policy.

Andrews told the Chinese emissaries that the NNP would like the Taiwanese debts to be treated as a separate matter in whatever financial package that Beijing was giving to Grenada as part of the switch in diplomatic ties.

He made it clear that Dr. Mitchell and his government did not want the Taiwanese debts to be part of the proposed US$50 million package from the Chinese on the Mainland as part of any accord to dump Taipei.

"...We had proposed the treatment of the Taiwanese liabilities as a separate item. It is necessary for several important reasons to eliminate the Debt to Taiwan. However, if you treat the paying off of the Debt and the community based projects as part of the initial USD 50 million, it will dilute significantly the impact of your generosity and help with our post-Ivan relief development. We need to find a way to handle the Debt to Taiwan without weakening your cash assistance", the Richardson Andrews letter said.

According to that website, the Chinese appear to have stiffed the Grenadans on the debt deal. After they made a deal with the then-ruling party, they switched sides and supported the other party, and also brought in Chinese laborers rather than using locals on construction projects (article). Hard to say whether anything on that site is true, but it sure is interesting.
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Daily Links:

• AIT Director Stanton comes out asking for resolution to The Beef Stupidity, points to US support for Taiwan.
• Philippe in Pingtung with excellent letter on the avian flu issue in the election context.
• For Beijing, mutual trust is one way
• Moscow, Beijing close to deal on 48 Su-35s.
• Confucius Institutes on Campus in the NYTimes
• AmCham Taichung Happy Hour: Tuesday, March. 13 at 7 p.m.—Appassionato Restaurant ltaliano. Italian style buffet $350NT

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[Taiwan] Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums! Delenda est, baby.

Those Meddlesome Taiwan Diplomats

The China Post published a denial from the Ministry of Foreign Affairs that it had helped to purchase an election in St Lucia:

The Ministry of Foreign Affairs (MOFA) yesterday denied accusations made by the main opposition party of St. Lucia that ambassador Tom Chou (周台竹) was meddling in the Caribbean ally's internal affairs.

The MOFA clarification came amid a recent report published by the Caribbean Media Corporation last week that quoted opposition leaders as accusing Chou of being involved in an election controversy in St. Lucia.

Kenny Anthony, the opposition St. Lucia Labor Party (SLP) leader, has called for the resignation, reprimand and recall of Chou because of his alleged interference in local politics, the report said.

Accusing Chou as being “a political operative” of the ruling United Workers Party (UWP), Anthony urged the envoy to waive his diplomatic immunity to allow investigations into allegations that Taiwanese funds have made their way into the pockets of UWP lawmakers.

In response, Chou has described the allegations as “lies” and said that Philip Pierre, deputy leader of the SLP, should “bring the evidence or be quiet,” the report said.

However, Anthony has warned that the SLP will “in the coming days and weeks” present evidence on the “misuse” of Taiwanese funds.

A quick search dragged up an article detailing the allegations, which seem rather too pat:

It is a development now very much in the public domain and involves the allocation by Taiwan of some US$3.8 million a year for expenditures in the 11 constituencies won by the UWP's parliamentarians at the December 2007 general election when it defeated the then governing Labour Pary of Dr Kenny Anthony.

An extension of this most interesting political development in the coming electoral battle for state power in St Lucia presents an interesting example of what should not be tolerated in the form of contemptuous foreign political interference in the domestic affairs of a sovereign state in any region of the world.

The hot point in this poisonous politics is the bizarre example it offers of expression of "gratitude" by a foreign government—namely Taiwan's—for having secured diplomatic relations with St Lucia in 2008 with a UWP administration in Castries.

Following the death of her father, who became seriously ill shortly after the December 2007 poll, Compton successfully contested the Micoud North constituency that has long been a stronghold of the UWP.

Subsequent internal divisions within the UWP, that also included monies flowing from Taiwan, via its embassy in St Lucia, to the 11 UWP parliamentarians, were to result from Jannine Compton's disclosure in parliament of EC$1 million (approximately US$350,000) being allocated to each of the ruling party's MPs to spend as considered appropriate in their respective constituencies.

St Lucia recognized Beijing until 2007 when it shifted relations to Taipei (2007 article on the fight in St Lucia). The opposition contends that the alleged funds are a reward for the switch in diplomatic recognition (another report)(another). As the China Post back story notes, the opposition apparently supports relations with Beijing. A review of China-Caribbean relations notes:

In the case of St. Lucia, the competition between China and Taiwan veered into the theater of the absurd as the debate became heavily polarized along political lines leading up to the 1997 election of Dr. Kenny Anthony as prime minister. As a result, recognition of China became a domestic issue with Anthony’s party, the St. Lucia Labor Party, supporting Beijing while Sir John Compton, leader of the United Workers Party (UWP), favored Taipei. These internal divisions are often rooted in ideological differences but enhanced by the “dollar diplomacy” practiced by both China and Taiwan in the Caribbean. When Anthony was elected prime minister in 1997, he switched allegiance from Taiwan to China within the first four months of his administration. During his administration St. Lucia was the recipient of much Chinese aid, especially in preparation for the Cricket World Cup, hosted by the West Indies in 2007. Four key Chinese aid projects, including the construction of a national stadium and a psychiatric hospital were used to woo the tiny nation out of Taiwan’s dwindling fold. Nonetheless the extent to which China’s “internal affair” with Taiwan was a domestic issue in St. Lucia became clear when the island’s most recent electoral results provoked a change in recognition of the “One China” policy.

The general election of December 11, 2006 saw a return to power of two-time Prime Minister Compton, and St. Lucia’s position on the Taiwan question was once again in play. With a population of almost 170,000 and an estimated GDP of $1.8 billion, the tiny nation emerged as a key fighting ground in the geopolitical battles for diplomatic recognition between China and Taiwan. On April 30 2007, St. Lucia formally recognized Taiwan and within a few days China withdrew its diplomatic corps (New York Times, May 2, 2007). In reality, St. Lucia’s switch does not represent a turning of the tides back to Taiwan but instead merely re-emphasizes the fact that recognition of China or Taiwan in the Caribbean is not an ideological issue, but instead one fueled largely by economic opportunism.

Moreover, St. Lucia’s flip-flop represents an exception, as most other English-speaking Caribbean states have moved decisively toward recognizing Beijing.....

Earl Bousquet, who used to head the St Lucia-China Friendship Association, scathingly describes the revitalizing effect of Taiwanese aid in a recent opinion piece on the upcoming election. MOFA's local denial in St Lucia is online here.
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Daily Links:

• Chinese troops reportedly enter Indian territory.
• Gordon Chang: Ma's Surrender Tour to Beijing
• China Post says Thai Shrimp Pancakes are actually a Taiwanese dish.
• My friend Adarsh's company Food Jing wins big at startup competition.
• Taiwan leverages environmentalism to ease South China Sea tensions.
• State Department to skip US-Taiwan defense conference for first time ever.

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[Taiwan] Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums! Delenda est, baby.