The general elections this Sunday in Paraguay could change the course of the foreign policy of the Latin American country in relation to rivals China and Taiwan, and with this, influence the expansion of Beijing’s growing geopolitical interests in the region, analysts warn.
The Paraguayan nation is the only South American nation that still maintains diplomatic relations with Taipei, a situation that could change if the Colorado Party, in power for more than 40 years, loses the presidential elections and the Concertación coalition wins instead. whose presidential candidate, Efraín Alegre, has already said that he would review the relationship with Taiwan.
This has been one of the most contentious issues among the favorite candidates in the race: Alegre, who questions why Paraguay neglects trade opportunities with the Asian giant, and the Colorados candidate, Santiago Peña, who defends the link with Taiwan.
As with the rest of the Latin American countries that have embraced China and its large injections of capital, in Paraguay the question of deciding between one side and the other has to do above all with economic interests, especially those of the large soybean producers and farmers from that country who want to do business with China.
“It is Taiwan’s last remaining South American ally. Paraguay has been receiving proposals from China to change diplomatic alliances, including vaccine diplomacy during the pandemic,” said Pepe Zhang, one of the lead researchers at the Adrienne Arsht Latin America Center in the Atlantic Council, a Washington-based think tank.
The head of the institution’s China-Latin America portfolio recalled that all this is happening barely a month after the Honduras break with Taiwan in favor of China, for mainly economic reasons, according to analysts.
“Since 2017 we can talk about Panama, El Salvador and Nicaragua, who have changed their relations with China,” said the foreign policy expert during a pane sponsored this Friday by the Atlantic Council.
Economic vs. geopolitical interests
“The main economic concerns for both the population and the government are three, both for the current one and for the one that may be elected. One is the worsening of the quality of life of the majority of Paraguayans in the last ten years,” said the founder of the Center for Analysis and Diffusion of the Paraguayan Economy (CADEP), Fernando Masi.
For the former chief adviser to the Paraguayan ministries of Industry and Commerce, as well as Finance, the second and third issues of interest are the “worsening of public finances” and the “high level of corruption within the State.”
In terms of Taiwan specifically, there is no foreign direct investment from Taiwan in Paraguay.”
“In terms of Taiwan specifically, there is no foreign direct investment from Taiwan in Paraguay. What we have is money from annual donations that is used for certain types of public works in Paraguay. But it is a symbolic amount with no real impact on the Paraguayan economy. “, detailed the economist.
The economic “little value” in relations with Taiwan contrasts with the business opportunities with China, which has used its resources as the key to open the doors of Latin America, a matter of concern for the United States, Beijing’s main geopolitical rival.
“In Latin America, Chinese investments are aimed at physical infrastructure or energy infrastructure that is needed in Paraguay,” Masi said.
Not only the infrastructure, “the lobby Paraguayan agriculture and especially beef, are a great voice in this drive to get closer to China,” said the expert on relations between Beijing and Latin America and professor at the US Army War College Institute of Strategic Studies. , Evan Ellis.
Despite the potential benefits to Latin American countries, Ellis noted that among countries that have favored a relationship with China, including Nicaragua, Costa Rica, El Salvador and Panama, “you actually see the record not as happy as many of the people who justified making the change said it would be.”
What could Beijing gain?
“China would benefit from having formal ties with Paraguay.
I think there is a direct political benefit,” said Masi, who argued that this step would play in favor of recognizing the “one China” policy that considers Taiwan as part of that Asian nation, something that Taipei rejects.
For the prestigious economist, without the “Paraguay obstacle”, China could expand its influence in Latin America and even negotiate trade or investment agreements with the entire Mercosur bloc.
“It could also increase the increasing aggressiveness of the PRC in seeking activities in Asia over Taiwan, plus it could also increase the aggressiveness in seeking other partners, whether it’s Haiti or Caribbean countries, and maybe depending on what happens in the elections, even Guatemala,” said Evan Ellis.
Looking ahead, Fernando Masi assures that “it doesn’t matter who wins the elections on Sunday, sooner or later Paraguay will establish relations with China, because not establishing diplomatic relations with China is like not establishing it with the European Union, with Japan or with USA” and adds that Beijing “is an economic power”.
“I understand what is the meaning of the dispute between the US and China at this time and I understand of course what are the geopolitical interests of the US and also of China in Asia, but we as Paraguay are not part of that game, and what we least want is that we will have a kind of cold war again as we had before in which the Latin American countries had our independence quite limited,” he said.
For Masi, establishing a diplomatic relationship with China “does not necessarily mean that we stop being strategic allies of the US, we will continue to be,” he added.
Strategic relationship with the US
The expansion of Chinese influence is one of the most pressing geopolitical concerns in the region and beyond for the US, which is why it is important that Washington get even closer to Paraguay, a key player in maintaining stability in the region, due in part to its position geography and its “tripartite” border with Bolivia, Argentina and Brazil.
For the US, the possible election of Ricardo Peña, former Minister of Finance in the government of Horacio Cartes (2013-2018) and close collaborator of the former president, could mean challenges, since Cartes currently is under economic sanctions by the US government for bribery and links to members of the terrorist organization Hezbollah.
It is important for the US, especially if Peña and the Colorado party win, to maintain a strategic balance.”
“It is important for the US, especially if Peña and the Colorado party win, to maintain a strategic balance. In other words, it is very important for us to fight corruption, it is very important for us to fight for democracy, but we do not want to corner our vital ally from falling into the hands of the People’s Republic of China,” Ellis said.
Paraguay is one of the largest marijuana producers on the continent. The battle for the legalization of crops is one of the burning issues in this presidential race, in which 13 candidates are running. Smuggling also abounds at its borders and at the government level cases of corruption are repeated.
“I think the United States should increase its support for Paraguay, especially that which has to do with this security problem,” Masi insisted.
Ellis agreed that “it’s more important to us [EEUU] work with the discourse and work with the Paraguayan institutions to help the Paraguayan government – whoever wins – to make good decisions that generate the greatest added value and the greatest benefit for them, in terms not only of economic benefit, but also their institutions, the corruption, etc.
This collaboration also involves increasing trade, which has been significantly reduced, according to what was revealed in the panel.
For Evan Ellis, the certification of Paraguayan beef in the US market is “vital”, so that producers can sell in the US, something “that is very, very important. Especially since Paraguay cut its beef exports to the market Russian due to Moscow’s invasion of Ukraine”.
Paraguay “is one of the countries that continues to cooperate relatively with the US agenda in the region,” said the Latin America expert, who pointed out that cultivating this relationship is important, especially when allied countries in the region approach Russia and China. , referring to Brazil, whose president Luiz Inácio Lula Da Silva recently traveled to Beijing and then received Russian Foreign Minister Sergei Lavrov in Brasilia.
“The fact that we have seen the change in Xiomara Castro in Honduras. The fact that we see certain behaviors like with [el presidente Gustavo] Petro and Colombia, like López Obrador in Mexico, moving away from the US on drug and security cooperation, really illustrates the importance of continuing with a partner that continues to work with the US on its core issues,” he emphasized.
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