Taiwan Implicated in Links to Authoritarian Regimes Through CABEI

Taiwan is internationally marginalized, as a result of Chinese pressure. As such, Taiwan clings to what diplomatic allies it has–the thirteen countries in the world that continue to recognize Taiwan diplomatically–even when a number of them are led by regimes with questionable human rights practices.

Taiwan’s ties to such countries date from it was itself an authoritarian state, controlled by the one-party rule of the KMT, though it has democratized in the decades since then. Nevertheless, today, democratic Taiwan often stands accused of “dollar diplomacy”, in subsidizing infrastructure development or providing slush funds to politicians in its allies in return for diplomatic recognition. This casts a large shadow over the aid that Taiwan otherwise provides its allies, such as providing scholarships to students, providing medical expertise, or efforts to boost agricultural development.

Institutions such as CABEI have come under international scrutiny because of the view that the CABEI hands out funds to bankroll the projects of dictatorial regimes in Latin America. Taiwan is the largest shareholder in CABEI and one of its two Asian members, alongside South Korea. Nevertheless, there is relatively little knowledge of CABEI in Taiwan, even if Taiwan’s participation in CABEI has been touted by President Tsai Ing-wen, and CABEI operates an office in Taipei 101.

When leaders of Latin American countries that Taiwan has diplomatic relations with visit Taiwan, such as with outgoing Paraguayan president Mario Abdo Benítez and authoritarian former Honduran president Juan Orlando Hernandez, CABEI’s offices in Taipei 101 are often on their itinerary. Indeed, in a sign of nepotism, Hernandez’s daughter, Ivonne Hernandez, previously worked at CABEI’s offices in Taipei.

Taiwan indicated that it would stay put in CABEI after Honduras broke ties with Taiwan under the administration of Xiomara Castro. Taiwan likely views CABEI as a way to continue to have a foothold in Latin America, at a time in which it is losing ties due to Chinese pressure.

Nevertheless, Taiwan stands to be criticized by the international community for its participation in CABEI, along the lines of international criticism of its dollar diplomacy. Does Taiwan simply sign off on questionable loans by the development bank? In particular, Taiwan’s role in the bank allows it to maintain its current credit rating, and so Taiwan should have the ability to influence the bank’s operations, but it does not act on this. This was recently questioned in the legislature several times in May by legislator Andy Chiu.

CABEI’s actions stand at odds to how the current Tsai administration has sought to frame Taiwan. CABEI signs off on infrastructure developments that displace local residents–in particular Indigenous–when the Tsai administration made a historic apology to Taiwanese Indigenous on behalf of the ROC state, and has sought to push for transitional justice for Indigenous. Green Bonds issued by CABEI occur on questionable auspices, which deviates from the environmental and sustainable development goals of the Tsai administration.

Moreover, individuals resisting CABEI funded-development have faced repression by police and state security forces–even murder. 25 dams have been financed by CABEI since 1992, with over nine killed for opposing the protests.

Given that as a democracy, Taiwan faces threats from China, Taiwan has long sought to distinguish itself from its larger neighbor on the international stage. Nevertheless, Taiwan’s behavior vis-a-vis CABEI and Latin American companies often seems similar to China’s bankrolling of development projects conducted by authoritarian governments in Latin America and elsewhere.

CABEI’s funding of infrastructure projects allows for greater spending on police repression by the regimes it funds, never mind that Taiwan itself saw such repression during the White Terror. The pattern of corruption in some of these projects also reminds of the widespread corruption in Taiwan during the authoritarian period. Otherwise, it proves an investment risk for Taiwan that countries that transition to democratic governments may not acknowledge debts to previous authoritarian regimes by way of CABEI.

Indeed, CABEI-funded development projects have been implicated in corruption in Costa Rica, Guatemala, El Salvador, and elsewhere. Dictators such as Nicaragua’s Daniel Ortega and El Salvador’s Nayib Bukele have been accused of being backed by CABEI financing.

It is to be seen whether the Tsai administration will respond in any way to the links between CABEI and Taiwan as it pertains to human rights abuses in Latin and Central America. The ball is in the Tsai administration’s court regarding how to address the human rights abuses Taiwan is complicit in.