Ricardo Martinelli, President-elect of Panama, has been quoted as supporting a reassessment of the traditionally strong Panamanian-Taiwanese relationship that has existed since 1954. The reassessment is certainly due to mainland China’s interest in furthering Taiwan’s diplomatic isolation with the outside world; isolation that will eventually contribute to the annexation of Taipei to Beijing. Presently, Taiwan has official diplomatic relations with 23 states; twelve of those states are in Central and South America and the Caribbean. The other 11 are in the South Pacific and Africa. All 23 states recognize the government of Taiwan as the true government of mainland China - an obviously surreal position given the current state of world affairs and mainland China’s growing power in all areas.

Of the 23 countries that have relations with Taiwan the most important is Panama. Panama is a very important ally for the Taiwanese because Taiwanese businessmen have for decades used the Canal and the Colon Free Zone as centers of international trade. Panama has also provided Taiwanese businessmen with an offshore tax shelter from high taxes back home. To strengthen their position in Panama, Taiwan has given large aid packages to the Panamanian government. Much aid has been funneled into wet rice agriculture, education, road building and gifts. Panama’s political elite has made many trips to Taiwan where they have been treated as heroes, especially under presidency of Chen Shui-bian – 2000-2008 - who supported Taiwanese independence and railed against the one-China policy. Chen Shui-bian’s Vice-President, Annette Lu, was a strong supporter of strengthening ties with Panama; both visited Panama, Chen 2004, Lu in 2003.

For Panama the strong relationship with Taiwan goes back to 1954. After the relationship was formalized, many Taiwanese migrated to Panama where they set up businesses and began trading. During the military years in Panama, Taiwan was a friend of Omar Torrijos and Manuel Noriega. Noriega was trained in counter-intelligence by the Taiwanese. During the cold war Taiwanese intelligence officers traveled on Panamanian passports. The selling of Panamanian passports was big business during the Noriega years and the Taiwanese were some of the best customers. Taiwan has also been home to a large percentage of Panamanian agricultural exports like shrimp and beef.

Mainland China, like a sniper, has been trying to pick off the countries that still have official relations with Taiwan. They’ve been doing it by offering countries huge aid packages, or threatening to cut countries that have diplomatic relations with Taiwan out of the China market. Costa Rica switched relations to mainland China after Oscar Arias was elected president in 2006. Under the Costa Rican presidency of Abel Pacheco – 2002-2006 – Taiwan invested huge amounts of money in the building of the Tempico Bridge and highway; it was a huge loss for the Taiwanese when Costa Rica decided to switch allegiances after the project was completed. With the switch Costa Rica received $130 million in nonrepayable aid and mainland China used its huge foreign exchange reserves to buy $300 million in Costa Rican bonds.

If the Chinese were willing to pay off Costa Rica for recognition they certainly will do the same with Panama. Expect the aid package to be even greater with Panama which is diplomatically much more important than Costa Rica.

Most Taiwanese are recognizing that Panama will eventually shift its recognition to mainland China; they are moving to the few remaining countries available to them. Paraguay’s Ciudad del Este has a large Taiwanese presence and Haiti has also been an important recipient of Taiwanese aid, but neither Paraguay nor Haiti have the dynamic economy of Panama.

To save itself from absorption by mainland China, Taiwan has taken the democratic path while the mainland has remained a one-party state. Beginning with the normalization of relations between the U.S. and China in January 1979, the Taiwanese embarked on a slow process of democratization as a way of keeping their diplomatic relations secure. In 1996, Taiwan was the first ethnically dominant Chinese society to hold a presidential election. But as Taiwan systemically democratized itself, mainland China systematically opened its economy and became a world economic power: democracy versus the huge China market. Most countries have chosen the China market.

In 2000 and 2004 the pro-independence Taiwanese President Chen Shui-bian was elected, but his presidency ended in corruption and scandal. The current Taiwanese president, Ma Ying-jeou , who will be in attendance during Ricardo Martinelli’s inguration, is in favor of the one-China policy – in other words of a union between Taiwan and mainland China.

The political model for such a union will be the one country, two systems model laid out by Deng Xiaoping during the 1984 unification talks between the UK and China over the return of Hong Kong. If Panama does switch its allegiance from Taiwan to mainland China, one-China will most certainly be one step closer to reality.

* More Articles on Living in Panama
* Real Estate in Panama
* Banks in Panama - Worldwide Banking Directory
* Universities in Panama - Colleges & Universities listed by Country
* Embassies and Consulates of Panama
* Hospitals in Panama