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Caribbean nations get caught in China-Taiwan tug of war

More than half the countries with diplomatic ties to Taiwan are in Central America and the Caribbean.  Some, like Grenada, are finding that switching allegiances can be expensive. 

By Ezra FieserCorrespondent / March 5, 2012

This photo, taken Jan. 11, shows a part of Grenada's western coastline.

Colin Perkel/The Canadian Press/AP

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Santo Domingo, Dominican Republic

Grenada, a trio of small Caribbean islands and a popular tourist destination, was awash in debt in 2005.  When China came calling with an offer of millions of dollars in aid if the country cut ties with diplomatic rival Taiwan, Grenada took the deal.  And it was rewarded: the nation received a new cricket stadium and other pricey tokens of appreciation.

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But seven years later, playing up to China’s game of dollar diplomacy has come back to haunt Grenada. Taiwan is now calling in loans it made when the countries were diplomatic allies, signaling that the battle between China and Taiwan is still alive and well in the Caribbean, and directly impacting Grenada’s lifeline: tourism.

Some 426,000 tourists arrive in Grenada by plane or cruise ship each year – more than four times the country's entire population. Taiwan’s move has left the local government scrambling to prop up its independent ports authority and avert disastrous airport shutdowns, as money previously used for upkeep is funneled into loan payments.

Dollar diplomacy

The People’s Republic of China has long tried to isolate Taiwan from the international community by convincing countries to cut diplomatic ties.

The two are separated by the Taiwan Strait, and China views Taiwan as a rogue state. During the 1990s and 2000s, they engaged in a diplomacy race that included offering aid to smaller countries in exchange for their diplomatic allegiance. The competition largely ended in 2008 when Ma Ying-jeou was elected president of Taiwan and instituted a policy to improve relations across the strait.

But much to Beijing’s consternation, 23 countries retain ties with Taipei, including 12 in Central America and the Caribbean, leading to cases of countries bidding out their diplomatic ties.

“No doubt, some countries in the Caribbean and Africa have tried to milk more loans from either Taipei or Beijing by playing one against the other,” says Zhiqun Zhu, a political scientist at Bucknell University in Pennsylvania.

St. Lucia, for example, dropped its ties with Taiwan in 1997 and then restarted relations with it in 2007.

Vulnerable and in debt

Taipei and Beijing may have struck a diplomatic truce, but that has not stopped their battle for recognition from these smaller countries, and money continues to pour in. Last year, China boasted its largesse by pledging to lend $1 billion to Caribbean countries for development projects.

Many Caribbean countries have been particularly vulnerable to the lure of dollar diplomacy, in part, because they carry massive amounts of debt.

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