After Honduras, is Paraguay next?

On March 26th, 2023, the People’s Republic of China (PRC) scored a significant diplomatic victory when the government of Honduras announced it was severing diplomatic ties with the Republic of China (ROC, Taiwan) and switching its recognition to the mainland. Meeting Honduras’ foreign minister in Beijing, the PRC’s new Foreign Minister Qin Gang lauded the decision, describing the decision as “a choice to stand on the right side of history and the side of a vast majority of countries.” It is expected that Honduran president Castro will visit President Xi on relatively short notice—an easy PR opportunity for China.

Whether it was intended or not (it very well might have been), the PRC’s coup coincided with ROC President Tsai’s state visit to the two remaining allies in Central America, Belize and Guatemala. There is no doubt that the announcement of Honduras switching sides partially overshadows what otherwise would have been an important opportunity for Tsai to showcase Taiwan’s international standing as an independent entity. (Elsewhere, Tsai’s predecessor also was not really helping.) It is a loss of face for the ROC, which is now left with just thirteen allies—and that number might even dwindle further later this year.

Indeed, for those following the trajectory of the PRC–ROC recognition rivalry, eyes are probably next on Paraguay. Taiwan’s largest remaining ally, it has often gone under the radar because of its consistent and somewhat subdued support for the ROC. Yet national elections in April 2023 might alter the political landscape in Paraguay, and thus also its foreign policies. This will sound all too familiar to Taiwanese officials: after all, Honduras’ break-away also began with national elections that decided a new foreign policy outlook.

To examine this further, I briefly look at the recognition switch that Honduras made this year. As will be argued below, this switch was not a surprise. Still, it is interesting to keep an eye on the diplomatic fallout and the public perception of the government’s decision within Honduras itself. Next, I make a brief comparison between the cases of Honduras and Paraguay, asking whether it is probable to expect a similar trajectory for Paraguayan decision making. I close with some thoughts about the relevance of these recognition switches.

President Tsai Ing-wen visits the ancient Mayan site of Tikal in Guatemala, March 2023.

The rise and demise of Taiwan—Honduras relations

Since the Taiwan—Honduras relationship now has received considerable attention, one might ask: was this relationship ever special? The answer is twofold. On the one hand, this relationship was like many other bilateral relationship between (far-away) countries, with regular diplomatic exchanges and cooperation, including student exchanges and trade investments. Honduras had diplomatic ties with the Republic of China when it still governed the Chinese mainland, and maintained its ties with the Republic when it withdrew from the mainland to the island of Taiwan. There were two principal reasons for this: most importantly, the established diplomatic relations and subsequent economic exchanges resulted in sufficiently positive outcomes for Honduran development; and the right-wing government of Honduras did not want to pursue ties with a Communist state (i.e., the PRC), opting instead for having relations with the then-authoritarian ROC regime under the Chiangs. Put this way, relations between the Honduran and Taiwanese governments historically align with the relations of other Central American countries with the ROC.

On the other hand, numerically, the relationship became increasingly important to Taiwan over time. When Costa Rica switched its recognition from the ROC to the PRC in 2007, the recognition behaviour of Central American states became fluid. Costa Rica was followed by Panama (2017), another significant loss, and also El Salvador (2018) and Nicaragua (2021). The simple fact that only Belize, Guatemala, and Honduras remained as diplomatic allies made these countries increasingly special. With Honduras now joining most of its regional neighbours in developing ties with Beijing, only Belize and Guatemala remain; Tsai’s state visit thus also reflects how important the bilateral relations with those two states will now become.

It is good to emphasize here that the decision by Honduran President Xiomara Castro to abandon the diplomatic relationship with the ROC was not a suprise. In fact, it can be traced back as far as ten years ago, when in December 2012 then-President Lobo publicly expressed interest in formally recognizing the People’s Republic, although not following through on this idea. Almost a decade later, during the campaign for the presidential elections at the end of 2021, the left-wing Castro also indicated clearly that she would be in favour of establishing ties with PR China over Taiwan. After her installment as president, she seemed to move on, although the new government’s plan listed pursuing ties with the PRC as its first foreign policy goal. A year later, in January 2023, reports surfaced about the foreign ministry’s clandestine interactions with the PRC, which ultimately culminated in the decision in early March. (The U.S. tried to prevent this from happening, mainly by sending an envoy to the country, but was unsuccessful.) Put this way, Castro’s decision is not much more than the delayed fulfillment of a campaign promise. Additionally, it may be good politics, especially if the Chinese have promised substantial financial support and investment in the Honduran economy—which it desperately needs.

Considering the publication of financial demands on the Honduran side earlier this year, which were apparently rejected by the Taiwanese side (and later publicly lamented by the Taiwanese side, too), it is likely that the PRC has agreed at least to some extent to provide a considerable amount of money, either in the form of loans (the preferred method) or foreign aid. In any case, the PRC is continuing its aid in constructing new dams—an ongoing effort that preceded the recognition switch by at least a decade. Now that ties have been established, Honduras might also join the (somewhat faltering) Belt and Road Initiative and also sign up for the (vague) Global Development Initiative, which will surely result in some form of financial investment.

It is interesting to take into account how the government’s decision was received domestically. According to reporting in El Heraldo, the government’s decision was not met with great satisfaction amongst the Honduran public. Elsewhere, the Chamber of Commerce sent a letter to Foreign Minister Reina García and subsequently published it, expressing concerns about the recognition switch upending long-established patterns of trade, which could have negative consequences for Honduran enterprises that engage in international trade. Local media also paid attention to other implications of the decision, including uncertainty amongst Honduran students at Taiwanese universities, living there on bilateral scholarship programs; the Foreign Minister made sure to assure that they would be able to continue their studies on the Chinese mainland if they wished. (The students can finish the semester at Taiwanese universities, yet are likely unable to graduate. The importance of these bilateral education programs should not be underestimated; they are very important for countries that want to increase their human capital. The PRC is also very active on this front.) This indicates that, while positive attitudes towards the decision certainly can be found, there does not seem to be immediate, widespread support, as relevant groups in society were rather satisfied with the Taiwan–Honduras relationship.

First Lady of Paraguay Silvana López Medeira, President of Paraguay Mario Abdo Benítez, and President Tsai in Taipei, February 2023.

After Honduras, now Paraguay?

During the electoral campaign in Honduras, the diplomatic recognition of the ROC and the doors that a recognition switch towards the PRC would open were a talking point. In this light—and in the light of the eventual implications of that debate—the political campaign currently ongoing in Paraguay might also set off alarm bells in Taipei. Even more in Paraguay than in Honduras, the diplomatic recognition of Taiwan is part of the discussion. And similar to Honduras, the choice in Paraguay is clear. The party currently in power, the conservative Colorado Party (Partido Colorado), is in favour of maintaining ties with the ROC, while the leading opposition party, the social liberal PLRA (Partido Liberal Radical Auténtico), overtly opposes maintaining ties with the ROC, instead favouring a recognition switch towards the PRC.

Paraguay’s diplomatic relations with the ROC date back to a decades-long dictatorship under Alfredo Stroessner. Stroessner maintained ties with ROC primarily because he liked its political system: it, too, was a militarist, right-wing dictatorship. In subsequent democratic elections, of which there now have been several, the issue of PRC/ROC recognition was not relevant, and ties with Taiwan were rather secure. This is also true for the most recent administration under President Abdo Benítez, who is clearly supportive of his country’s alliance with the ROC. During a recent state visit to Taiwan, he explained the relationship as one that supported democratic values and sought a “peaceful and sustainable world,” clearly moving the relationship beyond any materialist or otherwise shallow considerations. This, for one, goes beyond the depth of the Honduras–Taiwan relationship. Indeed, Abdo Benítez has repeatedly argued that ending diplomatic ties with the ROC would be a “historic mistake.”

And still, it might happen. Opposition leader Efraín Alegre, who is either leading or very close to leading in the polls for the upcoming presidential election on 30 April, has stated his position clearly: establishing ties with Beijing is the only decision that makes sense. On his website, while acknowledging that Paraguay values its “cooperation” with Taiwan, it “cannot continue to miss out on the economic opportunities of the Chinese market.” More concretely, Alegre foresees a “flow of potential investment [into the Paraguayan economy], especially in the infrastructure sector.” (What is true for all of Latin America is true for Paraguay: investment in infrastructure is very much needed. Several institutions, including the World Bank, have indicated this problem, and tackling this problem is a relevant topic of debate during the campaign. Seeing China and its Belt and Road Initiative as a solution for this problem makes sense politically.)

Alegre’s argument for a relationship with the PRC goes beyond investment opportunities. Most importantly, Paraguayan business argues that the PRC simply offers a bigger market for their export products than the ROC. Although the government in August 2022 announced that the Taiwanese have approved the export of Paraguayan pork, as such increasing trade opportunities for the crucial meat sector, there will always be more Chinese consumers than Taiwanese consumers. For this reason, Paraguayan political parties are under pressure of business lobbyists to establish political relations with PRC in order to facilitate more trade opportunities.

When it comes to the question of PRC/ROC recognition, the Paraguayan election thus seems to mostly resemble a debate between pragmatism and ideology. Although Abdo Benítez is not eligible for re-election, his successor Santiago Peña’s position is very similar. Peña has argued in favour of maintaining ties with the ROC, saying that Paraguay “has much to learn” from the Taiwanese. (It is true that Taiwan is helping Paraguay in several domains, including recent public policies targeting women’s participation in the labour force.) He also stressed the importance of strengthening ties with ‘exemplary’ democracies like the U.S. and Taiwan, and that Paraguay should “consider its [ideological] alignment.”

Footage of Honduran Foreign Minister Reina García and Chinese Foreign Minister Qin establishing diplomatic ties on Chinese state medium CCTV, March 2023.

The significance of contemporary recognition switches

Considering the clear positions of both the Colorado Party and the PLRA in the upcoming presidential election, it is likely that the outcome will reflect the future of Paraguay’s relationship with the ROC. If Peña is elected, the relationship will remain; if Alegre is elected, a severance of ties seems likely, possibly as soon as this year. (This does not take into consideration non-domestic attempts to influence any such decision, i.e., probable attempts by the U.S. to prevent a recognition switch from happening.) Of course, the Taiwanese will observe the results closely, and no matter who wins, they will attempt to sufficiently court them and keep them on board. If that would not help—and Paraguay becomes the next country that switches recognition from ROC to PRC—the question becomes: Does it matter?

There are, in my view, two reasons why the problem of the recent setback in Honduras, and possibly even an upcoming setback in Paraguay, is mitigated: (1) the fact that the number of ROC-recognizing states probably always will be more than one, and (2) the growing diplomatic, yet unofficial relations with far more important states.

First, although there is no doubt that the ROC dislikes the idea of more countries abandoning it and the issue of growing (formal) isolation in global diplomacy, it is arguable that there is little difference between, say, twenty countries recognizing the ROC and only ten countries doing so. The difference has no political or legal consequences. It is important for the ROC to maintain some formal relations with other countries, because this results in legitimacy; the exact number, however, is not of crucial importance. This might make more sense from the perspective of the PRC. Beijing’s end goal is for the ROC to have no (zero) diplomatic allies left. After all, this would make it very easy to argue that there is no Taiwanese statehood, and that Taiwanese claims of de facto or de jure independence are fallacies: the Chinese could simply point out that nobody in the world recognizes that statehood. For as long as there exist some states that do recognize the statehood, no matter how many, the Chinese argument holds less value. And it is very likely that the ROC will hold onto diplomatic relations with some states for a long time: besides the small island states (of which some are increasingly fed up with Chinese encroachment, pushing them in Taiwan’s arms) and the Vatican (which is at odds with Beijing, too), both Guatemala and Belize also seem rather satisfied with their ties to the ROC.

Second, I would argue that although losing Honduras as a diplomatic ally is bad news for the Taiwanese government (and losing Paraguay would be even worse), at the same time, the fact that other countries are significantly increasing their interactions with Taiwan is even more important. As much as President Tsai would like to continue meeting Honduran president Castro, it cannot be denied that meeting U.S. House Speaker McCarthy is much more impactful. The same goes for Czechian President Pavel’s phone call with Tsai and the visit of a German Minister to Taipei. Moreover, a growing number of politicians and government officials from important countries and institutions, including the U.S., U.K., Lithuania, Japan, the European Parliament, and others has recently visited the ROC. These interactions are very important for the Taiwanese: although they remain unofficial, they grant Taiwan a considerable amount of support and legitimacy. As such, they mitigate any formal loss of international recognition, because they provide Taiwan with better opportunities to participate in world politics and safeguard national security than the existing diplomatic relationships with small states with no foreign policy clout. It thus signals that there are still ample opportunities for the ROC to maintain its international standing, and possibly even expand it.

Update, May 3rd: By now, it has become clear that Santiago Peña, presidential candidate for the Colorado party, will be sworn in as Paraguay’s next president, later this year. This means that Colorado will remain in control of government, as it has done for most of the past five decades. It seems like Peña did outperform the electoral polling, as it suggested a close race—or even a win for Alegre, the opposition candidate. In any case, relief on the Taiwanese side is clear, and the Ministry of Foreign Affairs quickly published a congratulation. Peña, himself, left no doubt after his victory that he was serious about his support for Taiwan, tweeting about his commitment to “continue strengthening [the] historical ties of brotherhood and cooperation between [Paraguay and Taiwan].” Paraguay, for now, will remain Taiwan’s ally.

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