By Genevieve Donnellon-May
AUSTRALIA, Jan 10 2022 (IPS)

For the first time since 1990, China has (re)opened an embassy in Managua, Nicaragua, less than a month after Nicaragua cut ties with Taiwan. The (re)opening of the embassy on January 1, 2022 comes amidst the backdrop of US-China tensions, particularly over trade and Taiwan, as well as worsening Cross-Straits relations.

Genevieve Donnellon-May

China and Nicaragua officially (re)established diplomatic relations last month. On December 10, Asia time, diplomatic relations between China and Nicaragua were officially established. The official “Joint Communiqué on the Resumption of Diplomatic Relations Between the People’s Republic of China and the Republic of Nicaragua” was signed in Tianjin, China, by Chinese Vice Foreign Minister Ma Zhaoxu and Laureano Ortega, an advisor for investment, trade, and international cooperation to Nicaragua’s President Daniel Ortega – and, more importantly, the president’s son. As per the Joint Communiqué, Nicaragua recognises that Taiwan is part of China’s territory.

In response, Taiwan’s Ministry of Foreign Affairs (MOFA) responded by stating that Taiwan “deeply regrets” that President Daniel Ortega has disregarded the long-standing friendship between the two countries. MOFA noted that it has worked with the Central American country for many years to promote cooperation that “is beneficial to the people’s livelihood and assists the overall development of the country,” according to a MOFA press release. MOFA also reiterated that “Taiwan is not a part of the People’s Republic of China, and that the PRC has never governed Taiwan. The Taiwanese people will not bow to pressure from China.”

Days after the (re)establishment of China-Nicaragua relations, China sent 200,000 doses of Sinopharm vaccines to Nicaragua as part of its vaccine diplomacy. The 2000,000 doses, which were the first of 1 million, were accompanied by a Nicaraguan delegation led by President Ortega’s son, Laureano Ortega Murillo. The Nicaraguan foreign minister, Denis Moncada, thanked China for its vaccine donation and noted that was an “ideological affinity” between the two countries.

China and Nicaragua originally established formal relations almost forty years ago. In 1985, Nicaraguan president Daniel Ortega established relations with China. After he lost the election in 1990, the president Violeta Chamorro recognised Taiwan. In 2007, however, Ortega returned to power and was re-elected in November 2021 for a fourth term. A month after his re-election, Nicaragua cut ties with Taiwan, following months of worsening relations between Ortega and U.S. President Biden’s administration.

In addition, Nicaragua’s decision to establish formal relations with Beijing means that the number of Taiwan’s diplomatic allies has decreased to 14, down from 22 when President Tsai Ing-wen took office in 2016. Previously, China and Taiwan had observed a so-called “diplomatic truce” in place during the previous Ma Ying-jeou administration and the Kuomintang (KMT) wherein China did not diplomatic overtures to Taiwan’s diplomatic partners.

As a result of the change in recognition and China’s inroads in Central America, Taiwan appears to be increasingly isolated on the international stage. Most countries switched to Beijing by the end of the 1970s, after Taiwan (as the Republic of China or ROC) lost its seat in the United Nations in 1971 to the People’s Republic of China (PRC). Aside from Nicaragua, recent transfers of recognition from Taipei to Beijing have been undertaken by the following countries: Solomon Islands (2019), Kiribati (2019), El Salvador (2018), Dominican Republic (2018), Panama (2017), Gambia (2016), and Sao Tome and Principe (2016).

After Nicaragua, many eyes are now on Honduras, a small Central American country, and its newly elected president, Xiomara Castro. In November 2021, the outgoing Honduran President Juan Orlando Hernandez began a three-day surprise visit to Taiwan. The visit came amidst concerns from Taiwanese officials in Honduras that the next Honduran president may sever ties with Taipei and establish formal diplomatic ties with Beijing.

Establishing ties with Beijing was one of the pledges made by Castro during her presidential campaign in 2021. A switch in relations from Taipei to Beijing, she declared, would give Honduras access to economic opportunities as well as Chinese-made Covid-19 vaccines and low-cost medicine. Although Castro will not be sworn in as president until later this month, her pledge may put Honduras in the middle of an intensifying diplomatic tug-of-war between Taiwan and China and becoming the new front against intensifying global showdown between the two superpowers. These geopolitical tensions combined with the financial needs of Central American governments, the resurgence of populist leaders in the region, and China’s growing economic importance, combined with China’s vaccine diplomacy and the absence of a truce between Taipei and Beijing, all influence Central America’s relations with both the U.S. and China. And currently, they are the driving factors in pushing Central American countries “away from the US and towards China”, as noted by Evan Ellis, a professor at the US Army War College who researches Latin America’s relationships with China.

At the same time, a move to establishing diplomatic relations with China could be partly motivated by a desire to counter American hegemony in the country and the region. Washington has long dominated Central America both economically and politically, viewing it as its strategic backyard. Before the presidential election, China accused the US of “arm-twisting and bullying behaviour” after Washington reiterated that it wanted Honduras to maintain its longstanding diplomatic relations with Taiwan. However, the U.S. holds considerable sway over Honduras. In particular, remittances, mainly from people living in the U.S., make up more than 20% of Honduras’ gross domestic product, according to the Brookings Institute. This economic reality, combined with significant U.S. aid to Honduras, also means that Washington does have influence over local politics.

However, in recent years, Honduras has seen rapid increases in inequality, corruption, violence, and poverty have further driven migration to the US. Unemployment has risen above 10% while major hurricanes devastated northern Honduras in 2020. Honduras is now the third poorest country in the Americas: over 66% of the population live in poverty. According to the World Bank, the pandemic considerably impacted the country’s economy, with the national GDP expected to have contracted by 9% in 2020.

Nonetheless, China’s influence in Honduras continues to grow. In 2020, Chinese state-owned companies finished the construction of 105MW hydropower dam in the country. Also, more external debt is owed to China than to the U.S. According to World Bank data, 4% of Honduras’ outstanding external debt is owed to China, while only 0.01% to the US. Further, China already accounting for as much as a fifth of Honduran imports. In this way, any potential financial benefits, such as loans and investments from establishing formal ties with China, or even playing Washington and Beijing off each other, may be considered too important to ignore.

Genevieve Donnellon-May is a research assistant with the Institute of Water Policy (IWP) at the National University of Singapore. Her research interests include China, Africa, transboundary governance, and the food-energy-water nexus. Genevieve’s work has been published by The Diplomat and the Wilson Center’s China Environment Forum.

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