Panama Switches Diplomatic Recognition to PRC: Understanding the Chinese Action and Strategy

Jabin T. Jacob, PhD, Fellow, Institute of Chinese Studies

Taiwan has lost yet another member of the small group of countries that recognize it diplomatically with Panama in Central America making the move to build ties with the PRC instead. The last country to switch ties was São Tomé and Príncipe in December 2016. Before that it was Gambia at the beginning of the previous year. But in between it must also be recalled that there was the move in Nigeria to get the Taiwan representation to move from Abuja, the capital, to Lagos, Nigeria’s commercial center, an attempt to curtail whatever limited diplomatic privileges that the Taiwanese enjoyed in practice there. Taiwan is now down to just 20 countries recognizing it officially.[1]

With the latest action, there can be no doubt that China under Xi Jinping is engaged in a long-term but steady strategy of trying to isolate Taiwan diplomatically and constrain its international space. Beijing is declaring in unequivocal terms that it does not believe that it can reach any form of accommodation with Tsai Ing-wen’s pro-Taiwanese independence Democratic Progressive Party-led government and that its patience to wait for reunification is diminishing.

While the first aspect, that is the lack of faith in Tsai and the DPP might be the result of an objective evaluation of the situation especially given the Taiwanese side’s unwillingness to accept the so-called ‘1992 consensus’, the latter part has much to do with China’s own evolving sense of its international self. In other words, just as Deng Xiaoping’s dictum of ‘observe calmly… bide one’s time’ has been set aside in favour of a more proactive approach to change the ground realities as for example, in the South China Sea issue, so also with Taiwan. The Xi leadership appears to be believe that Taiwan’s politics and economy must be actively influenced or controlled in order to achieve the desired outcomes. Constraining Taiwan’s international space is merely one strand of this approach.

What is more while earlier, attitude of US administrations was an active and constraining factor in its turn for China, Beijing appears to sense an opportunity to increase costs for Taiwan without itself being affected by a strong American reaction with Donald Trump as US president. It would appear that China now sees Trump’s opening salvo of publicizing his contact with Tsai in December on the eve of his inauguration as a one-off without much policy forethought involved.

Interpreting China’s Choice of Countries to Wean Away from Taiwan

Panama’s action must hurt all the more since Taiwanese president Tsai Ing-wen had visited Panama in June last year as part of her first official overseas visit. Nevertheless, the move should also not surprise Taiwanese officials since as was evident from the Wikileaks revelations in 2011, Panama was one among a group of Central American countries including Nicaragua, Paraguay, Honduras – also countries that Tsai has visited – Dominica and Haiti that had all expressed interest in switching recognition to Beijing from Taipei, with the Chinese apparently stalling the moves as part of a ‘diplomatic truce’ with then Taiwanese president Ma Ying-jeou of not poaching Taiwan’s diplomatic allies.[2]

So the first aspect of the Chinese targeting it might be said is on countries that are being opportunistic and willing already to make the switch, perhaps in search for greater economic largesse. A second related aspect might be to target countries that Tsai has visited in order to drive home the diplomatic embarrassment for Taiwan.

A third aspect is the economic one. While to a large degree, China’s increasing economic heft and reach across the globe is part of an ongoing and even organic process, if one were to take the São Tomé case, it is also evident that there is an element of Chinese legwork involved. Even during the years of truce with the Ma Ying-jeou administration, Beijing opened a trade mission São Tomé in 2013 with the added lure of possible investment in a US$400 million deepwater port.[3] Already in 2012, China had overtaken Taiwan in terms of its trade volume with São Tomé. Taiwan in fact suffered a sharp decrease relative to China in by the end of the year.[4]

The case of Panama is not much different with a sharp difference in Panama’s trade volumes with China and Taiwan evident from at about 2010. Further, there are again important Chinese investments in Panama that are leverage for Beijing. For example, Margarita Island Port, Panama’s largest port and located at the Panama Canal’s opening to the Atlantic Ocean is owned by China’s Shandong Landbridge Group.[5] Thus, a fourth element of strategic relevance might also be added to the list of factors driving China’s timing and choice of Taiwanese allies to target.

And taking all these factors into account and given the somewhat fickle nature of its leadership, Nicaragua could well be the next Chinese target to steal away from Taiwan. A private Hong Kong company owned by a Chinese national has been endeavouring since July 2014 to build a canal across the South American nation in order to rival the Panama Canal[6] even if the estimated US$50billion project has little to show in terms of progress so far and faces heavy domestic opposition.[7]









Leave a Reply

Your email address will not be published. Required fields are marked *