Costa Rica Shuns Taiwan for China

After more than 60 years of support, and having received hundreds of millions of dollars in aid, Costa Rica has dumped Taiwan for China.

Flanked by his foreign minister and two vice presidents, President Oscar Arias announced June 6 that Costa Rica was ending its diplomatic relations with Taiwan in order to formalize relations with China, Costa Rica's number two trading partner after the United States.

"This decision is not due to any ideological change of direction nor geopolitical reasons or joint interests; it is an act of fundamental realism, it is an awakening to the global context that we must play a part in," Arias said.

Costa Rica officially opened relations with China during a secret, one-day visit to Peking by high-ranking Costa Rican government officials on June 1.

Taiwan­, which calls itself the Republic of China and has claimed to be the rightful government of China since being driven off the mainland by Mao Tse-Tung in 1949,­ is now left with only 24 allies worldwide, most of which are small countries. The move sparked speculation that other Latina American allies, such as Panama and Nicaragua, could go the same route.

Taiwanese officials immediately announced the end to all donations and financing it had promised for various projects, including a $35 million highway project between San Carlos and Naranjo, a $15 million reconstruction of the Calderon Guardia Hospital, severely damaged by a fire in 2005, and $2.6 million renovation of downtown San José, which included pedestrian boulevards already under construction.

"The Costa Rican government will be accountable for all responsibilities and consequences of turning its back on 63 years of friendship," read a statement from the Taiwanese Embassy, released shortly after Arias' announcement.

President Arias promised that he would personally find funding for the hospital and the highway projects, and insisted the decision to begin relations with China "will bring enormous benefits."

In 2006, Costa Rica exported more than $1 billion to China, and imported $618 million, leaving a trade balance favorable for Costa Rica. And the market is growing: exports to China in January were 238% higher than they were a year earlier, and $386 million in goods have been exported there from Costa Rica during the first four months of this year.

In comments made following his announcement, President Arias criticized Taiwan, saying it could have been more generous.

"I always told them…you should be more generous if you want to have friends in the would, because every day you have fewer," Mr Arias said.

Your Latin America Insider,

Suzan Haskins
for International Living

P.S. We're making plans for our first International Living Live and Prosper in Costa Rica seminar, to be held in Costa Rica in November. If you'd like to be first on the list to receive details once they are finalized, e-mail Events@InternationalLiving.com.