Top 10 Costa Rica

Costa Rica Will Become A Model For China’s Relations With Latin America

Most people would be hard put to find Costa Rica on the map. Football fans know that it is a country which challenges for one of the places accorded Central America and the Caribbean for the Word Cup. Costa Rica extends from the Pacific Ocean in the west to the Caribbean in the east. Its population of 4.5 million are overwhelmingly of European descent. It has the distinction of being the first state in modern times to abolish officially its military.Why is the country suddenly important? It has decided to abandon its recognition of Taiwan as the legitimate government of China. Its place has been taken by the People’s Republic. Why should a democratic government which has been critical of communism and especially Cuba in the past suddenly change course? Only the naive would be surprised to hear that money was the key factor. Beijing is to buy $300 million of Costa Rican bonds and extend a loan of $130 million. Scholarships will be provided for students to study in China. An oil refinery is planned to give the country more energy independence.

China has made clear to all countries that diplomatic recognition depends on accepting its ‘One China’ policy. This means breaking with Taiwan.

Twelve of the 23 countries which recognise Taiwan are in Latin America. Six are Central American states: Guatemala, Belize, Nicaragua, El Salvador, Honduras and Panama. Five are Caribbean countries: Dominican Republic, Haiti, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines. The only South American state which still recognises Taiwan is Uruguay.

What can China offer which Taiwan cannot? Beijing argues that it is becoming a major economic power and this will promote trade and investment. Trade turnover with Latin America last year was over $140 billion. Most of this was concentrated in the larger states exporting raw materials to China.

China was helped by the election of President Ma Ying-jeou in March 2008. Unlike his predecessor, President Ma soft pedals independence and is forging a closer relationship with the People’s Republic.

Many expected a domino effect after Costa Rica recognised the People’s Republic in 2007. This has simply not happened. The reason appears to be that pro-Taiwan states are playing a wait and see game. What are the real advantages of switching to Beijing? Costa Rica and China are negotiating a free trade agreement. Clearly the relationship with Costa Rica will be a model to attract other states.

Taiwan is very active in Central America and presumably has offered some carrots if states remain loyal. Every state that defects to Beijing weakens Taiwan’s sovereignty. However China is playing a long game. It believes that time is on its side and it will eventually squeeze Taiwan out of Latin America. This would also affect the standing of the United States in the region. The tide is turning in China’s favour.