One of Taiwan’s Allies Weighs Embracing China for Vaccines

(Bloomberg) --

As poor nations struggle to get their hands on Covid-19 vaccines, a thinly-populated South American country finds its chances linked to its unexpected role in growing tensions between the U.S. and China.

Paraguay’s 63-year-old alliance with Taiwan — forged when both were run by right-wing authoritarians — means the government can’t directly buy from China’s vaccine makers that have supplied other Latin American nations. Officials say they’ve been approached to switch to Beijing to get the doses.

U.S. Secretary of State Antony Blinken phoned President Mario Abdo Benitez to stiffen his spine against such a shift. That led Foreign Minister Euclides Acevedo to speak frankly this week to Washington and Taipei.

“Mr. Blinken has been very firm, telling Abdo: ‘Look, your allies are Taiwan and us,’” Acevedo said on television. “But we ask these strategic allies for proof of their love. Before holding hands, you have to at least take us to the movies.”

Acevedo warned that “countries with which we don’t have diplomatic relations” are actively courting other nations with vaccines. “President Xi Jinping has a lot of interest in a tie-up with us.”

Asked to respond, a State Department spokesperson said the U.S. is working with Paraguay and like-minded partners to support pandemic response efforts and praised Taiwan as a leading democracy and partner.

China’s Communist Party views Taiwan as its territory, which must be taken by force if necessary and often shuns countries that recognize it as independent. The government in Taipei rejects Beijing’s claim, insisting Taiwan is already a de facto sovereign nation.

“As Taiwan loses allies, China’s claim gains more and more legitimacy,” said Francisco Urdinez, a researcher at the Catholic University of Chile’s Asian studies center and coauthor of a paper on Paraguay’s relationship with Taiwan. “If no country recognizes Taiwan, it will be much easier for China to reclaim possession of the island.”

For years, as China developed into one of the world’s biggest markets, the vast majority of capitals chose Beijing over Taipei, meeting symbolic objection from Washington, which was also increasing its Chinese ties. But as Beijing’s global ambitions have grown, the U.S., both under President Donald Trump and now Joe Biden, sees it as a menacing rival, and Taiwan as needing more support.

Meanwhile, the U.S. and European Union are holding onto their vaccines while China has provided millions to countries such as Mexico, Chile and El Salvador in a display of soft power.

With its hospitals overwhelmed and deaths rising, Paraguay, which has a population of 7 million, has only been able to obtain 163,000 doses, including 23,000 Chinese shots donated by Chile and the United Arab Emirates. Benitez has faced weeks of protests and a failed impeachment motion due to the shortages.

The Paraguay China Chamber of Industry and Commerce, known as CPCIC, is one of dozens of intermediaries that have approached the beleaguered administration offering to broker a vaccine deal. While some middlemen have asked for multimillion-dollar down payments, the chamber -- acting on behalf of a local pharmaceutical company -- wants health authorities to sign Chinese paperwork so the firms can start negotiations.

“We basically said: If Paraguay’s government wants to fill out the forms, we could submit them for approval by Sinovac or Sinopharm,” the chamber’s president Charles Tang said of a letter CPCIC sent to the health ministry last week. The chamber said the government responded with questions.

Paraguay belongs to a shrinking list of 15 countries, including Guatemala and Honduras, that recognize Taiwan. When its foreign ministry said that several third parties hinted that breaking with Taiwan was a precondition to obtain Chinese vaccines, China called it “malicious” misinformation. Taiwan, in turn, accused “some parties” of using vaccines for “political manipulation.”

The relationship between the two countries dates back to when anti-communist presidents Alfredo Stroessner and Chiang Kai-shek ruled in Asuncion and Taipei. They never met. Stroessner paid a state visit to Taiwan in 1975 accompanied by his personal secretary, the father of Benitez. Taiwan has showered hundreds of millions of dollars in aid on its ally over the years, but bilateral trade is tiny compared to Paraguay’s other trading partners.

Among other things, Taiwan has donated to Paraguay badly needed Covid drugs and medical supplies, allowing the government to redirect housing aid to buy vaccines.

Even so, the pandemic is giving fresh impetus to those among the country’s business and political elite who say it’s long past time to abandon Taiwan.

Paraguay’s support of Taipei has sidelined it from public works financing under China’s Belt and Road initiative. Last year, China enjoyed a trade surplus of almost $2.9 billion with Paraguay, which can’t directly sell it beef and soy.

Over the past year, left-wing and conservative opposition parties have sponsored two non-binding resolutions to establish diplomatic relations or directly negotiate the purchase of medical supplies and vaccines with China. While the ruling Colorado Party voted down or heavily amended the resolutions, some of its lawmakers are starting to question the party’s longstanding support of Taiwan.

China’s pandemic aid to its allies made an impression on Jazmin Narvaez, who leads the Colorado Party faction in the lower house loyal to Benitez.

“There isn’t a raging debate,” she said by telephone. “But several colleagues have doubts as to which alliance is in Paraguay’s best interests. It’s a situation that has to be studied.”

Even the government has signaled that what was once an ironclad relationship could be subject to review. Minister Acevedo left the door open, saying, “That is a political debate that merits an agreement between all branches of government and society.”

©2021 Bloomberg L.P.