(UNTITLED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP04T00447R000302080001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: January 12, 2017
• Document Release Date: June 30, 2011
• Sequence Number: 1
• Publication Date: September 6, 1985
• Content Type: MEMO

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DIRECTORATE OF INTELLIGENCE
6 September 1985
China's Active Diplomacy in Latin America
Summary
China this fall may score a string of diplomatic victories against
Taiwan in Latin America, hitherto a diplomatic stronghold for Taiwan.
Through economic incentives and payoffs, Beijing recently persuaded
Bolivia to establish relations with China, and Uruguay and Grenada seem
likely to do so before the end of the year. By further undermining Taiwan's
international legitimacy, Beijing hopes to sap Taipei's will to resist China's
unification overtures. In Central America, Beijing also may see a chance to
enhance its "independent" image and to counter Soviet and Cuban
influence by cooperating with non-socialist governments, and especially
by supporting the Contadora process, which China has publicly endorsed.
We expect Beijing to be patient in its pursuit of Taiwan's friends.
However, Taipei is attempting to hold on to its position in the region
through increased diplomatic representation and economic support.
This memorandum was prepared by Office of East Asian Analysis.
Information available as of 6 September 1985 was used in its preparation. Comments
and queries are welcome and may be directed to the Chief, Foreign Affairs, China
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Over the past year China has aggressively used economic incentives and under
the table payments to weaken Taiwan's Position in Latin America, where 14 of the 24
countries that still recognize Taipei are located. For example, Latin American diplomats
say that Beijing has agreed to make up $50 million a year in lost Taiwanese aid and
trade with Uruguay - probably a key factor in Uruguay's reported decision to establish
relations with Beijing by the end of this year. Although this figure is well below Taipei's
promise of $600 million in trade over the next five years, Taiwan's failure to deliver
commercial aid to Uruguay as promised in 1984 probably damaged its credibility in
Montevideo. We suspect that China made a similar offer to Bolivia. 25X1
Beijing also has offered to participate in joint economic ventures as well as make
up lost Taiwanese trade and aid if Nicaragua will sever ties with Taiwan. So far,
Managua has refused the offer. 25X1
In countries immune so far to Chinese diplomatic overtures, Beijing has tried to
establish cultural or commercial ties. Beijing recently sought approval from the
Nicaraguan government to hold an export commodities exhibition in Managua in 1986.
Earlier this year, Costa Rica politely rebuffed a similar suggestion. Beijing also has tried
to open channels to opposition political parties such as Dominica's Labor Party, hoping
to influence government policy indirectly. In a similar vein, China has moved to open
party-to-party ties with Nicaragua as a way of establishing dialogue with the
government. In addition, the Chinese are propagandizing to journalists and politicians in
the region in an effort to persuade them that Taiwan's reunification with the mainland is
Chinese Demands
In return for its economic aid, Beijing of course insists that countries recognizing
China break official relations with Taiwan. It has also sought their ackowledgement of
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Chinese sovereignty over the island. However, in its haste to gain recognition, China
has been willing to use Its most flexible normalization formula. Beijing recently allowed
Grenada to delete a phrase from a joint normalization communique asserting that
Taiwan Is an inalienable part of Chinese territory. We suspect that China will be equally
flexible in reaching terms with other states in the region.
Goals and Prospects for the Future
Beijing's main interest is in keeping the diplomatic initiative in Latin America and
increasing the pressure on Taiwan. In addition, China may perceive an opportunity to
counter Soviet and Cuban influence in the region through relations with the
non-socialist Central American governments and through support for the Contadora
Process, which Beijing has publicly endorsed. However, China's failure to gain the
recognition of Nicaragua, which still has ties with Taiwan, is both a source of
embarassment and an impediment to these goals.
Economically, China is becoming increasingly capable of competing effectively
with Taiwan in Latin America. Excluding Panama, which serves as an entrepot for
international exports, Taiwan's annual trade with its Latin American friends amounts to
around $110,000,000 in exports and $65,000,000 in imports, figures which China is
capable of matching. Taiwan's aid to the area is also small.
Nonetheless, we believe that Taipei's hold in Latin America will be hard to break.
Many of the governments that support Taiwan are strongly anti-Communist, such as
Paraguay, Haiti, the Dominican Republic, Costa Rica and El Salvador. Some, such as
Guatemala and Honduras, also receive military assistance from Taiwan, including
anti-Communist psychological warfare training programs for security officers -
programs that these countries would hardly trust Beijing to provide. Finally, China
probably faces opposition in Nicaragua from the Soviet Union and Cuba, neither of
which are enthusiastic about China's attempts to gain influence in Latin America.
In our judgment, China recognizes these problems, and will be patient in courting
Taiwan's friends. We expect China to give priority to the pursuit of the smaller Caribbean
island states, which greatly need financial aid, and of opportunists such as Panama,
which, is currently engaged in negotiations with
Taiwan in turn appears to recognize that it cannot afford to be complacent. For
now, it seems intent on protecting its ties with Caribbean and Central American
countries, where its advantages are greatest. Taipei has already drafted a "Caribbean
Basin Initiative Investment Plan" which relaxes external investment restrictions and
provides low interest loans for Taiwan investments in Panama, Costa Rica and the
Dominican Republic. Vice President Lee Teng-hui will visit Costa Rica, Panama and
Guatemala for a two-week goodwill tour in September, and Taipei plans to establish
embassies in St. Lucia, St. Kitts, and Dominica to strengthen its diplomatic
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Subject: China: Active Diplomacy in Latin America
1 - David Laux, NSC, Rm 302, OEOB
1 - James Lilley, Principal Deputy Assistant Secretary,
Bureau of East Asian and Pacific Affairs, Rm 4318, Dept.
of State
1 - Chris Szymanski, Office of Chinese Affairs, Bureau
of East Asian and Pacific Affairs, Rm 4318, Dept. of
State
1 - John J. Taylor, Director, Office of Analysis for East
Asia and the Pacific, Bureau of Intelligence and
Research, Rm 8840, Dept. of State
1 - John DeWitt, Director, INR/IAA, Rm 7358, Dept. of State
1 - John Sloan, DIO for East Asia, Rm 2C238, Pentagon
1 Rm 1C945, Pentagon
1 - yron Jackson, Office of Intelligence Liason, Rm 6854,
Dept of Commerce 1 - Executive Director, Rm 7E12
1 - DDI, Rm 7E44
1 - NIO/EA, Rm 7E62
1 - C/EA Rm 5D10
1 - C/EA Rm 5D38
1 - C/PES, Rm 7F24
1 - PDB Staff, Rm 7F30
1 - CPAS/ILS, Rm 7G50
1 - CPAS/IMC/CB, Rm 7G07
1 - D/OEA, Rm 4F18
1 - Research Director, Rm 4G48
1 - OEA/China/Division, Rm 4G32
1 - OEA/China/Foreign Affairs Branch, Rm 4G32
1 - OEA/China/Domestic Policy Branch, Rm 4G32
1 - OEA/China/Development Issues Branch, Rm 4G32
1 - OEA/China/Defense Issues Branch, Rm 4G32
1 - OEA/Southeast Asia/Division, Rm 4F38
1 - OEA/Northeast Asia/Division, Rm 4G43
1 - ALA/Middle America/Caribbean/Division, Rm 4F29
1 - ALA/South America/Division, Rm 3F24
1 - OGI/ECD/IT: Rm 3G46
2 - OCR/ISG, Rm 11-119
1 - DDO/EA/
1 - OCR/CH, Rm 1H18
1 - NIC/Analytical Group, Rm 7E47
1 - C/DOVJRm 31310
1-
1-
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