Paraguay Seeks $1 Billion Investment From Taiwan to Help It Resist China’s Pressure

Paraguay's President-elect Mario Abdo Benitez (R) greets Taiwan's President Tsai Ing-wen at his house in Asuncion, Paraguary, on Aug. 14, 2018. (Norberto Duarte/AFP/Getty Images)

President Mario Abdo Benitez of Paraguay has said that his nation requires $1 billion in investment from Taiwan to help the Paraguayan government resist pressure to switch diplomatic recognition to China.

Benitez said in an interview with the Financial Times on Sept. 29 that his government was working with Taiwan’s president Tsai Ing-wen to ensure that Paraguayans “feel the real benefits of the strategic alliance.”

“There is Taiwanese investment of more than $6 billion in countries which don’t have diplomatic relations with Taiwan, we want from that $1 billion to be put in Paraguay,” he said in the interview.

Benitez said the $1 billion investment would help his government “build the argument” about the importance of keeping its alliance with the self-ruled island.

China claims Taiwan as part of its territory despite Taiwan being a sovereign nation with a democratically elected government. Only 14 nations, including Paraguay, have formal diplomatic ties with Taiwan.

However, Benitez said that Paraguay’s alliance with Taiwan has resulted in a lack of access to the Chinese market, which has upset local agricultural producers.

“Imagine what the producers say when meat prices fall and they don’t have access to China,” he said. “They ask you, ‘Please, we have to open up to the Chinese market. What does Taiwan give us when we are a country which could sell its entire soy and meat output to China?’”

‘No Quid Pro Quo’ in Bilateral Ties

Paraguay’s Foreign Minister Julio Cesar Arriola later clarified that Paraguay–Taiwan relations are not subject to a “quid pro quo” or condition, but based on shared values, according to Taiwan’s Foreign Affairs Ministry.

Joanne Ou, the ministry’s spokesperson, said that Arriola made a clarification to Taiwan’s ambassador in Paraguay that Benitzer was only encouraging Taiwan to invest in Paraguay during his interview, Taipei Times reported.

According to a study published in Foreign Policy Analysis last year, Taiwan invested an average of $4 million a year in Paraguay from 2005 to 2014 and contributed an average of $14.8 million in aid.

The study was authored by Tom Long, an associate professor at the University of Warwick, and Francisco Urdinez, an associate professor at the Institute of Political Science.

“Paraguay received nil from China in aid, investment, or finance, while regional annual average values for countries with diplomatic relations with China represented 1 percent of their GDP, a striking difference,” it stated.

“Economic benefits from Taiwan do not compensate for these losses. Taiwan is a small trading partner for Paraguay, in absolute terms and relative to China. In 2018, trade with Taiwan represented 0.33 percent of Paraguay’s total trade,” the study says.

China has in recent years persuaded some of Taiwan’s allies, such as Nicaragua, the Solomon Islands, Panama, El Salvador, and the Dominican Republic, to switch allegiance, with the prospect of increased trade and investment.