My Take | Taiwan forecast: cloudy with the chance of another diplomatic loss

It never rains but it pours. The weather forecast on the diplomatic front looks terrible for Taiwanese President Tsai Ing-wen. Come April, the island may lose another Latin American country to mainland China. Coming so soon after Honduras announced its decision to switch diplomatic recognition to Beijing, it will be another blow to Tsai and her political legacy as her controversial presidency is near its end.

It will, of course, depend on Paraguay’s coming election in late April, but political trends in the country are not promising, at least so far as Taipei is concerned. Politically a centralist, Efrain Alegre is the main presidential candidate of the opposition and leader of the Authentic Radical Liberal Party. His election platform has already declared that a victory on April 30 will mean establishing diplomatic relations with the mainland.

Twice the runner-up in the presidential elections of 2013 and 2018, many political observers expect that Alegre will be third time lucky. One reason is that he enjoys the full backing of the country’s powerful soy and beef lobby. Beijing has dangled opening the mainland market to both industries. Another reason is that the ruling Colorado Party is plagued by infighting and allegations of official corruption.

To appreciate the economic significance of the Chinese market for the country, you only have to look up the data. According to United Nations figures, Paraguay is the world’s sixth largest producer of soybeans and soybean oil, and the fourth largest exporter of soy. Soy cultivation contributes to a whopping 18 per cent of its gross domestic product. The country is the eighth largest beef exporter in the world, and its production accounts for more than 12 per cent of GDP. Together, the two industries employ roughly 400,000 people, in a nation of 6.7 million.

China’s offer of preferential trade treatment is understandably irresistible, but for Uncle Sam’s influence. If Paraguay does make the switch, Taipei will be left with just 11 nations, along with the Vatican and Somaliland, that recognise it diplomatically. However, the entire South America will have gone over diplomatically to Beijing.

The examples of countries such as Panama and the Dominican Republic in the Caribbean that have recently switched recognition are too enticing. Both countries have seen a significant boost in mainland Chinese investments and infrastructure projects; likewise, Argentina, Brazil and Uruguay in South America. Indeed, Argentina and Uruguay have been benefiting from the indirect Paraguayan trade with China as Paraguay has to route its exports through the ports of both countries.

Taiwan has relied on its long-standing ties with Paraguay, and Tsai frequently appeals to the two governments’ shared democratic values. It cannot match China’s economic gifts, however. It’s ironic, though, that diplomatic relations were first established in 1957 by Taiwanese President Chiang Kai-shek and his Paraguayan counterpart Alfredo Stroessner, both US-backed autocrats during the Cold War.