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Viewing cable 06TAIPEI3878, FOREIGN MINISTER JAMES HUANG ON NICARAGUA AND PRC

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Reference ID Created Released Classification Origin
06TAIPEI3878 2006-11-16 10:59 2011-06-21 08:00 CONFIDENTIAL American Institute Taiwan, Taipei
VZCZCXRO0687
OO RUEHCN RUEHGH
DE RUEHIN #3878/01 3201059
ZNY CCCCC ZZH
O 161059Z NOV 06
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3057
INFO RUEHBJ/AMEMBASSY BEIJING 5941
RUEHBY/AMEMBASSY CANBERRA 4374
RUEHMU/AMEMBASSY MANAGUA 0135
RUEHME/AMEMBASSY MEXICO 0049
RUEHNJ/AMEMBASSY NDJAMENA 0028
RUEHZP/AMEMBASSY PANAMA 0096
RUEHKO/AMEMBASSY TOKYO 8210
RUEHWL/AMEMBASSY WELLINGTON 1601
RUEHCN/AMCONSUL CHENGDU 1520
RUEHGZ/AMCONSUL GUANGZHOU 9716
RUEHHK/AMCONSUL HONG KONG 7160
RUEHGH/AMCONSUL SHANGHAI 0536
RUEHSH/AMCONSUL SHENYANG 5488
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC
RHHJJAA/JICPAC HONOLULU HI
RUEKJCS/SECDEF WASHINGTON DC
RHHMUNA/USPACOM HONOLULU HI
C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 003878 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 11/15/2031 
TAGS: PREL TW NU
SUBJECT: FOREIGN MINISTER JAMES HUANG ON NICARAGUA AND PRC 
"DOLLAR DIPLOMACY" IN AFRICA 
 
 
Classified By: AIT Director Stephen M. Young, Reason 1.4 (b/d) 
 
1.  (C) Summary: Foreign Minister James Huang told the 
Director on November 15 that Taiwan is cautiously optimistic 
of its ability to preserve relations with Nicaragua under the 
Sandinistas, emphasizing that Taiwan was pleasantly surprised 
by both the tone and substance of the telephone conversation 
between President Chen and President-elect Ortega on November 
10.  Nevertheless, Huang assessed that the next three to six 
months in the relationship with Nicaragua will be a "critical 
period" for Taiwan as the PRC presses to re-establish 
diplomatic ties with the future Sandinista government.  On 
Beijing's recently concluded Africa-China Forum, Huang said 
Taiwan's limited foreign affairs budget handicaps Taipei's 
ability to compete with Beijing's "dollar diplomacy" in 
Africa.  End Summary. 
 
 
President Chen's Telephone Conversation with Ortega 
--------------------------------------------- ------ 
 
2.  (C) The Director asked Foreign Minister James Huang 
(Chih-fang) on November 15 about Taiwan's prospects for 
maintaining diplomatic ties with Nicaragua once Daniel Ortega 
is inaugurated as President in January, 2007.  Noting that 
Ortega had made shifting recognition to Beijing a campaign 
pledge, Huang responded that he was cautiously optimistic of 
Taiwan's ability to preserve relations.  He noted that Taiwan 
was pleasantly surprised by both the tone and substance of 
the telephone conversation between President Chen and 
President-elect Ortega on November 10.  Ortega received 
Chen's 25 minute call "warmly" and politely, using language 
that Taiwan's interpreter said is normally reserved for 
intimate friends.  President Chen, who made concluding 
remarks in Spanish, offered to work with Ortega to help 
realize his campaign goal of eradicating poverty and boosting 
rural development.  Huang said Ortega responded positively to 
Chen's remarks, expressing a desire to see the bilateral 
relationship "consolidated and enhanced." 
 
Huang Analyzes Taiwan's Challenges in Nicaragua 
--------------------------------------------- -- 
 
3.  (C) Huang suggested that the next three to six months in 
the relationship with Nicaragua will be a "critical period" 
for Taiwan as the PRC seeks to re-establish diplomatic ties 
with the future Sandinista government.  Huang noted that 
working in Taiwan's favor is the goodwill that has built up 
between the two countries over the past 16 years.  Taiwan has 
devoted extensive resources to help Nicaragua modernize its 
transportation and economic infrastructure, bailing Managua 
out of a financial crisis on at least one occasion.  Huang 
demurred discussing the extent of Taiwan's financial 
assistance with the Director.  (Note:  Taiwan will send Vice 
Minister for Latin American Affairs Javier Hou to lead a 
delegation that will explore ways to cement bilateral 
relations.  Huang said Taiwan is also working to send a 
political "heavyweight" to attend Ortega's inauguration in 
January.  End Note.) 
 
4.  (C) Huang asserted Beijing is working hard to court 
Ortega.  Taiwan's major challenge will be overcoming the 
Sandinista's traditionally good relations with the PRC and 
their "ideological" closeness.  Huang was certain that 
Beijing was already discussing financial assistance and other 
economic incentives to gain Managua's recognition, but said 
money or past ties will not be the only factors in Ortega's 
calculations.  Ortega appears to be less "ideological" than 
in the past and may want to maintain some distance from the 
leftist camp in order to keep a balanced relationship with 
the U.S.  Huang suggested that, following what he 
characterized as the "Panama model" of 2004 when Taiwan 
stabilized relations with its new President, Ortega could 
accept economic assistance from the PRC without a reciprocal 
diplomatic quid pro quo. 
 
Mexico as PRC's Broker in Central America? 
------------------------------------------ 
 
5.  (C) Turning to other regional concerns, Huang 
characterized Mexico's recent activities in Central America 
on behalf of the PRC as a "headache" for Taiwan.  Huang 
asserted that China is using Mexico as a platform to expand 
its influence in the region.  As an example, Huang cited 
Mexican willingness to broker meetings in Europe, Mexico 
City, and other locales between PRC Foreign Minister Li 
Zhaoxing and leaders from Taiwan's diplomatic partners in 
Central America.  Huang added that he had no information on 
the benefits Mexico received from the PRC for playing the 
role of its intermediary in the region. 
 
PRC "Dollar Diplomacy" at Work in Africa 
---------------------------------------- 
 
6.  (C) Huang raised the recently concluded China-Africa 
summit in Beijing as an additional example of Beijing's 
growing assertiveness in other parts of the developing world. 
 Huang portrayed the summit as evidence of China's increasing 
clout in Africa, pointing to the write-off of USD 10 billion 
in African debt and offer of USD 5 billion in preferential 
loans and investment incentives.  He added that in addition 
to these above-board means the PRC has also used "dollar 
diplomacy" to woo African leaders who maintain diplomatic 
ties with Taiwan.  As an example, Huang claimed that Beijing 
had made USD 50 million in direct cash payments to the 
Chadian President and USD 5 million to the Foreign Minister 
in exchange for shifting recognition from Taiwan to the PRC. 
 
 
7.  (C) With a limited foreign affairs budget of 
approximately USD 900 million and heightened public 
accountability and institutional checks, Taiwan will find it 
difficult to compete with China's "dollar diplomacy," said 
Huang.  Recent cuts of about USD 80 million proposed by 
Taiwan's Legislative Yuan, initiated by the pan-Blue 
opposition and targeted mainly at cutting funding for head of 
state trips abroad, will further reduce Taiwan's diplomatic 
competitiveness.  Huang added he has been lobbying opposition 
legislators to reverse the cuts, arguing they would affect 
not only President Chen's final year in office, but also 
severely hamper the next President's first few years of 
diplomacy. 
 
Comment 
------- 
 
8.  (C) While professing cautious optimism about Taiwan's 
prospects for holding on to Nicaragua, Foreign Minister Huang 
nevertheless was also clearly aware of the threat to its 
diplomacy posed by the PRC.  In the face of Beijing's ongoing 
efforts to squeeze Taiwan's international space, Taiwan would 
have a major diplomatic success if it is able to maintain 
relations with the Sandinista-led government.  We will 
probably not know Ortega's true intentions toward Beijing 
until after his January inauguration.  Given the suddenness 
and unpredictability with which its diplomatic partners such 
as Chad have switched recognition to Beijing and the 
Sandinista's previous ties with the PRC, Taipei will continue 
to be nervous about its ability to maintain this relationship 
over the long term. 
 
 
YOUNG