Caribbean Remains On Top As CBI Turns 35

THE STAR BUSINESSWEEK SEPTEMBER 7, 2019

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CARIBBEAN REMAINS ON TOP AS CBI TURNS 35 The Citizenship by Investment (CBI) industry is 35 years old this year, having been pioneered by St Kitts and Nevis in 1984. Since then, it’s grown to become a significant money-maker for small islands looking to trade passports for investments and bolster their economy with foreign funds.

BY CATHERINE MORRIS, STAR BUSINESSWEEK CORRESPONDENT Continued on page 4

IN THIS EDITION OF

SBW THE STAR BUSINESSWEEK

The Two Chinas Heading into the 2020s The Caribbean and wider Latin America have become a focal point of the People’s Republic of China’s (hereafter referred to as China) ambitions as it seeks to diminish the diplomatic power of the Republic of China (hereafter referred to as Taiwan) and its claim to stand apart from Beijing’s unquestioned rule of all Chinese territory.

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An evening skyline in downtown Taipei, Taiwan’s capital, with the Taipei 101 Skyscraper in the background. The Taipei 101 building held the title as the world’s tallest skyscraper from 2004 to 2010 and is currently the 10th highest building in the world.

Taiwan is Trading for its Freedom For the Republic of China (hereafter called Taiwan) 2019 is seeing it face a greater threat to its way of life than it has for many years.

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MAKING MOVES

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The STAR Businessweek PROUDLY PRODUCED BY STAR PUBLISHING CO (1987)

JANELLE JOYEUX, THE FACE BEHIND SWEETDREAMS CUSTOM CAKES

BY DEAN NESTOR, STAR BUSINESSWEEK CORRESPONDENT

Janelle Joyeux, founder of Sweetdreams Custom Cakes, has a budding reputation for delivering the best customised cakes.

C

akes bring a smile to the faces of all who encounter them, and that in turn brings a smile to the owner and founder of Sweetdreams Custom Cakes, Janelle Joyeux. Originally from Laborie, Joyeux has delighted her customers with the highest quality cakes for about a decade. Though the business is based at her Corinth home, it often takes her to every part of our lovely island. Joyeux sat down with Businessweek to discuss the unique flavour her business has brought to the island’s cake baking industry.

WHAT INSPIRED YOU TO START THE BUSINESS? JOYEUX: Actually, my daughter’s been my inspiration. When I had her 14 years ago, I wanted to make sure she had a better life and so I started with her first birthday cake. I built up from there. She’s motivated me to just push forward.

WHAT GOT YOU INTO CAKE BAKING? JOYEUX: I come from a family of bakers. When I started I literally learnt

how to do what we call fondant in half an hour from my aunt.

HOW DID YOU COME UP WITH THE NAME? JOYEUX: When I think about a cake, it’s one of the things that make you happy. Usually when you have sweet dreams, you wake up and you’re always in a smiley mood; so that’s where the name comes from.

IS THERE ANY CAKE THAT’S THE SAME AS ONE YOU’VE DONE BEFORE? JOYEUX: I try my best never to use the same cake twice. Sometimes you can’t avoid it because when styles are trending, people actually go for the same things but I always try to make them different. But most of the time customising cakes is based on clients, and on what’s trending.

WHAT ARE THE REVIEWS LIKE? JOYEUX: They’re great! I have an average review score of 4.9 out of 5 on Facebook.

Continued on page 6

CHINA / TAIWAN RELATIONS

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THE TWO CHINAS HEADING INTO THE 2020s

BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT

T

he Caribbean and wider Latin America have become a focal point of the People’s Republic of China’s (hereafter referred to as China) ambitions as it seeks to diminish the diplomatic power of the Republic of China (hereafter referred to as Taiwan) and its claim to stand apart from Beijing’s unquestioned rule of all Chinese territory.

Approaching 2020, it’s an important time to consider what may be Beijing’s next steps. How much closer is the Communist Party of China (CPC) in reunifying Taiwan with the territories of the People’s Republic of China?

FRIENDS IN THE NEIGHBOURHOOD The past two years have seen Taiwan lose a number of key allies in this region who have switched sides on which nation they recognise as the rightful government of China: Panama in June 2017, the Dominican Republic in May 2018 and El Salvador in August 2018.

Still, Taiwan’s diplomatic future remains tied to this region more than any other. Of the seventeen nations that retain full diplomatic relations with Taiwan, nine, including Saint Lucia, come from the Caribbean and Latin America.

Although there have been reports of the Solomon Islands and the Vatican (as a city state) being set to make a switch, the direct threat that a revisionist China could pose to other Asian nations, and the ideological divide between the Catholic Church and a government which demands subservience of religion to the state, means either state would look to a swap with much trepidation.

Latin American (LATAM) nations do not necessarily have to factor in the same considerations. A revisionist China would not be the direct threat to LATAM in the same way it would to Asia, and nor must any nation in the region consider the faith of over one billion people when making foreign policy decisions. With LATAM nations having a ‘freer hand’ to decide between the two, Taipei and Beijing also know they must increasingly up the ante to secure or pry away nations to their cause.

THE TWO CHINAS INTO 2020 Even if Taiwan were to lose diplomatic recognition from all allies, this would not see the nation

Taiwan has a dynamic capitalist economy that is driven largely by industrial manufacturing, and especially exports of electronics, machinery, and petrochemicals.

automatically cease to function. China knows that Taiwan is a military tinderbox in the region; China’s diplomatic efforts are reducing Taiwanese influence, and it has increased military patrols around the island, but any invasion runs the risk of a response in kind from the US, Japan and allied nations in the region. China is a rising military power but it still lags far behind the US in capability, and would be no match for the US in combination with other military powers in the region.

Washington also looms as an even more important calculation for Beijing in the Trump era. The trade tensions with the US have threatened to cripple the exports of manufacturers like Huawei, due to the effective ban on US companies like Google supplying the Chinese manufacturer with software such as its Gmail and YouTube apps. Although China has a massive domestic market for its goods, it cannot rely on that alone to build its economy into the future.

Even if Trump proves an aberration as a president, and is replaced in 2020, the US as a whole has shifted in recent years from viewing China as a strategic partner — first devised by the Clinton administration in the 1990s — to a strategic competitor. With the political capital that it is spending in this area, and the desired perception that Beijing is being weakened by its rivals, nations that may have previously been ready to swap from Taipei to Beijing, might now have a new calculation.

CAN BEIJING REALLY GET WHAT IT WANTS? Beijing is getting closer to its apparent goal. It is isolating Taiwan effectively, growing in economic power, and using enhanced hard and soft power to spur further isolation of Taiwan. Even so, Beijing is now stuck between a rock and a hard place with what it seeks to pursue.

Just a few years ago, when relations

between Taipei and Beijing were far better than now, Beijing was citing the ‘one country, two systems’ model of Hong Kong as a shining example of the possibilities of reunification. Yet nobody in Taiwan would look upon the events of recent weeks and months in Hong Kong and desire that situation for their island.

Just as the attention of the world on events in Hong Kong has shown, Beijing cannot advance militarily on Taiwan without provoking worldwide outcry.

Even if China gambled, and counted on the US not intervening, it would certainly be subject to a new round of isolation and sanctions. It would also have to deal with a resistant population, and the prospect of an insurgency playing out in the YouTube era that would further diminish Beijing’s standing globally.

Put simply, Beijing may be closer to its reunification goal than ever before — and yet never so far.

Just a few years ago, when relations between Taipei and Beijing were far better than now, Beijing was citing the ‘one country, two systems’ model of Hong Kong as a shining example of the possibilities of reunification

HISTORY NO LONGER A GUIDE TO THE FUTURE In 2013, early on during his rule, Chinese President Xi Jinping said that a political solution to Taiwan ‘must reach a final resolution’ and that ‘these issues cannot be passed on from generation to generation’. While Taiwan has also been a combustible issue, Xi is unquestionably cut from a different cloth than other rulers, as not since Mao has a leader had such power in the CPC. Although the year 2000 or 2010 was certainly not without geopolitical challenges, arguably not since World War II has the international community been so unpredictable as it is, heading into 2020. There is no suggestion that Xi Jinping or the Chinese government alone are to blame for this.

The only reunification scenario that would be acceptable to the Taiwanese people and stakeholders further afield is one that occurs peacefully and with Taiwanese consent. Instead, the CPC believes attempts at suffocation, isolation and condemnation of the Taiwanese government, and the citizens who democratically elected it, are the ideal way to go about inspiring a desire for reunification.

As we approach a new decade, China will play a greater role than ever before in maintaining global stability or destabilizing it, commensurate with its ambitions. All of us have an interest in seeing stability maintained, especially for vulnerable nations which rely on international norms being observed in order to see their domestic security maintained.

GIVING VOICE TO THE ISSUE Nations that retain formal diplomatic relations with Taiwan have an important role to play in this process, and in this era. While the ChinaTaiwan issue is complex, there is no complexity surrounding the fact that the CPC has increasingly flexed China’s muscles as a major power in Asia, with little regard for international norms, or the smaller nations that rely on them.

LATAM nations which seek to turn from Taipei to Beijing may consider that the long-term economic benefits of doing so justify such a move but, as the CPC grows increasingly assertive in seeking to silence all who don’t align with its agenda, little nations must ask, as they head into 2020 and a decade of rising mega powers globally, whether a new deal is actually better if it comes at SBW the cost of one’s voice.

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CITIZENSHIP BY INVESTMENT

CARIBBEAN REMAINS ON TOP AS CBI TURNS 35

and singled out as providing the most affordable investment options. It also came top in terms of citizenship timeline and mandatory travel or residence.

Lowest scoring areas for the country were standard of living, which looks at factors such as security, education and life expectancy, and due diligence processes, although Saint Lucia did gain recognition for introducing new measures that exclude applications from jurisdictions that cannot be properly vetted.

Continued from page 1

“The CBI Index is intended as a practical tool both for those who wish to compare citizenship by investment programmes as a whole and for those who, instead, value certain aspects of a programme more than others. These elements are reflected by the seven pillars of the CBI Index: freedom of movement, standard of living, minimum investment outlay, mandatory travel or residence, citizenship timeline, ease of processing, and due diligence.” — Professional Wealth Management by The Financial Times 2019 CBI Index

I

n an era of increasing globalisation, where many high net worth individuals consider themselves world citizens, it’s not surprising that CBI is on the rise. For the individual, a second passport can mean greater security, freedom of movement and a way to legally hold assets offshore. For the country handing out citizenship, a CBI programme is a relatively risk-free way to plug gaps in infrastructure or tourism development.

But, like all industries, CBI is subject to current trends and there are a few disruptive forces worth noting as the sector moves forward in its fourth decade.

CBI IN THE CARIBBEAN At time of writing, there are thirteen CBI jurisdictions around the world and five of them are in the Caribbean: Antigua and Barbuda, St Kitts and Nevis, Dominica, Grenada and Saint Lucia. CBI is a huge contributor to the economy of these nations, providing between 10 and 20 per cent of GDP. St Kitts and Nevis and Dominica operate the most successful CBI programmes in the region. The latter, in particular, has flourished. Sustaining almost catastrophic

damage from the 2017 hurricane season, Dominica used CBI funds to rebuild and repair. It has also channelled investments into real estate with four out of seven approved hotels and resorts opened or planning to open this year. The island, which launched its CBI programme in 1993, is focused on ensuring investments are exploited for maximum economic and social benefit, and has also used CBI funds to further sustainable initiatives such as a geothermal plant and hurricane-

According to the CBI Index: “The Caribbean countries operate far-reaching, strict and rigorous due diligence programmes — for which they have since become internationally recognised”

proof housing.

The FT’s CBI Index 2019 ranked Dominica top of the world’s CBI jurisdictions with a score of 91 per cent for its performance in seven areas: freedom of movement, standard of living, minimum investment outlay, mandatory travel or residence, citizenship timeline, ease of processing and due diligence. This was the highest score ever achieved on the CBI index. St Kitts and Nevis came a close second with 89 per cent while Grenada and Saint Lucia filled out the top four with 87 and 84 per cent respectively.

Saint Lucia is the new kid on the block.

The island’s Citizenship by Investment Programme (CIP) began in 2016 and is steadily growing. The CIP generated EC$66.4 million for the fiscal year 2018-2019 — more than double the EC$27.8 million collected the year before. The initiative gives investors the opportunity to invest in real estate and has approved one such project so far — phase three of the Resort and Residences at Honeymoon Beach in Canelles, developed by the Galaxy Group.

Saint Lucia was recognised by the CBI Index as one of the top performers in the minimum investment outlay category

MARKET FORCES The Caribbean continues to outperform its global competitors in the CBI space with all five nations taking the five top spots on the current CBI Index. If it wants to maintain its position, the region must keep abreast of global forces which will make CBI a sector to watch in years to come.

One of the most apparent trends has been the emergence of China. In 2018 China had 285 billionaires, worth a total US$996 billion, according to research group Wealth-X. As the Asian superpower continues to create high net worth individuals, these one-percenters are looking for options. Chinese applicants account for around 45 per cent of Caribbean CBI applications, according to the FT’s CBI Index 2019. Given China’s already considerable links with the Caribbean in terms of infrastructure investments and diplomatic overtures, it is likely that interest from Chinese HNWIs will continue to grow.

As demand grows, so too does supply.

Greece is reportedly launching its own CBI programme next year and trade journal Investment Migration Insider predicts that five or six new jurisdictions will be onboard by 2027. A bigger market will require more co-operation and collaboration to ensure the necessary due diligence takes place and CBI schemes maintain their integrity.

The Caribbean is building on work already done in this area with plans to supplement the existing CARICOM Joint Regional Communications Centre with an OECS-only initiative that would establish uniform legislation and an oversight committee.

The CBI sector has come a long way since it began 35 years ago, gaining new legitimacy as it evolved from a ‘passports for sale’ industry to a legitimate, respected scheme that benefits both host countries and their new citizens. As misconceptions about the market fall away, and security fears are allayed by modern infrastructure, harmonised regulation and global co-operation, the sector is set to strengthen, and the Caribbean is expected to hold on to first position.

According to the CBI Index: “The Caribbean countries operate far-reaching, strict and rigorous due diligence programmes – for which they have since become internationally recognised.

The Caribbean will likely maintain its dominance, using its lengthy experience to provide certainty and, where necessary, refine processes.”

CARICOM / PRIVATE SECTOR DEVELOPMENT

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CARICOM DEVELOPMENT FUND TARGETS AGRICULTURE, ENERGY AND REGIONAL COHESION

BY CATHERINE MORRIS, STAR BUSINESSWEEK CORRESPONDENT

T

he Caribbean has its commonalities, but it’s also a region of widening disparities where the wealthiest islands consistently outperform their more disadvantaged neighbours.

Hoping to address these gaps and ensure that every island plays to its economic strengths is the CARICOM Development Fund (CDF) which has been active in Saint Lucia since its inception, supporting projects in agriculture, trade and tourism.

SME SUPPORT The CDF’s mandate is to provide technical and financial support to disadvantaged member countries (as defined by the International Monetary Fund). “We support infrastructure development, in terms of expanding production and trade, and we support enterprise development and business competitiveness,” says CDF CEO Rodinald Soomer. “We are open to supporting SMEs in all sectors: agriculture, tourism, manufacturing and the cultural industries; that is a core part of our mandate.”

The Fund was established in 2008 and is currently in its second round of disbursements, which are channelled through Country Assistance Programmes.

Disadvantaged member states must apply for funding and their proposals are subject to a rigorous appraisal before being evaluated by the CDF Board. From submitting the paperwork to obtaining Board approval can take as little as three months as the Fund aims to be as nimble and effective as possible.

AT WORK IN SAINT LUCIA As one of CDF’s disadvantaged member states, Saint Lucia has benefitted from several grants and loans over the years, receiving over US$6 million since 2011.

The first round of funding was funnelled into four key areas that aligned with the CDF’s mandate of enhancing and supporting the private sector.

Aiming to provide direct assistance to struggling small businesses, the CDF provided a concessional loan of US$3.72 million to the Saint Lucia Development Bank (SLDB) in 2017. This resulted in the SLDB being able to approve US$4.5 million in sub-loans to the private sector.

CDF funding also helped create the Trade Export Promotion Agency (TEPA), which received US$1 million in 2015. It also supported the Youth Entrepreneurship Agri-Entrepreneurship Project (YAEP) with a grant of US$1.37 million for training, tools, land preparation and infrastructure development. By the end of 2017, the YAEP had trained 75 young agri-entrepreneurs.

CDF staff meet with the Youth Entrepreneurship Agri-Entrepreneurship Project (YAEP) team in Saint Lucia. (Photo courtesy CDF)

Soomer says the first cycle of funds saw very positive outcomes in Saint Lucia: “These projects have gone very well for Saint Lucia. We have had a good track record there.”

In the current round of funding, TEPA is receiving further assistance with a US$332,800 grant to develop a revised National Export Development Strategy.

A second CDF grant of US$120,000 will help establish the ‘institutional framework and roadmap’ for the government’s Village Tourism initiative, with a focus on enabling small producers in the tourism sector to scale up and leverage opportunities in the Village Tourism market.

AREAS OF INTEREST Tourism is the Caribbean’s strongest sector, but upcoming areas such as agriculture and renewable energies are increasingly coming across the CDF’s radar.

In April the CDF met with the Caribbean Agricultural Research and Development Institute (CARDI) to sign a Memorandum of Understanding. Collaboration between the two agencies will take the form of knowledge, expertise and technology.

In terms of renewables, the Fund has helped St Vincent and the Grenadines build a solar photovoltaic farm at the Argyle International Airport and, in February, Antigua and Barbuda received a US$1 million CDF grant to help increase its solar power capabilities.

By the end of 2020 the CDF aims to roll out a pilot project making it easier for energy SMEs to access finance and technical support. According to Soomer, the Credit Risk Abatement Facility (CRAF) is “an eco-system comprising a

CDF CEO Rodinald Soomer (left) signs an MoU with CARDI Executive Director Barton Clarke. (Photo courtesy CDF)

credit risk instrument, technical assistance and monitoring and evaluation aimed at addressing the funding gaps in the energy sector by encouraging financial institutions to lend to SMEs with bankable projects.”

The CRAF pilot will take place in three countries and Soomer says it is “highly likely” that Saint Lucia will be one of the three.

STRONGER TOGETHER The CDF is a CARICOM agency and, as such, its overriding aim is to promote regional cohesion, particularly in the economic sense, to smooth the way for the CARICOM Single Market and Economy (CSME). “Given the integration process in CARICOM, driven by the implementation of the CSME, some will benefit more than others,” says Soomer.

“Without interventions to promote cohesion, targeting the disadvantaged, integration could accentuate uneven rates of development, causing greater disparities.”

As it approaches the end of its 20152020 Strategic Plan, the CDF is scaling up. It now has the means to grant funds not just to Less Developed Countries but also the More Developed Countries (MDC) among its 12 members, provided they are used to help a disadvantaged community or sector within the MDC. Soomer says: “We are at the stage now where we are moving to the next level.

We are now in a position to support disadvantaged regions and sectors across the entire community.”

In addition to this, the Fund is looking to expand its membership, hopefully welcoming Monserrat in the near future and, once several issues have been

resolved, eventually Haiti.

“In the short-term we can very easily embrace Montserrat but Haiti is a little more demanding,” says Soomer.

“I believe the community would like to see the CDF expand but it is something we need to do in a structured and organised way. It is not easy to double your operations overnight. We have to be very careful and studied in our approach.”

Another area where the Fund must show caution is cost. Its operations are self-financed through its loan portfolio and the return on its investments.

Disbursements come from a combination of member states’ contributions and international assistance from bodies such as the European Union and the UK Department for International Development. In the first cycle of funding, which ran from 2008 to 2015, the CDF collected US$100 million from member states. Projected contributions for the second round, covering 2015 to 2020, are US$65.8 million.

Collecting those contributions is an ongoing battle, says Soomer who became CEO in 2015 and often finds himself in the role of salesman. “I came in to an organisation that had demonstrated its relevance and its ability to make a difference. What I did not expect was that we had to still re-engage countries to convince them of its importance. Because of the fiscal pressures they face, you need to continue to give them good reasons to support our regional institutions.

“We have to face up to the economic realities our members face. We just have to keep on plugging away and ensure they prioritise their contribution. It is a continual process of advocacy.”

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MAKING MOVES / COMPANIES OFFICE

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JANELLE JOYEUX, THE FACE BEHIND SWEETDREAMS CUSTOM CAKES Continued from page 2

WHAT FLAVOURS DO YOU BAKE? JOYEUX: I am not a plain person, so my flavours are not plain. I offer basic flavours but my listing includes vanilla, orange and lemon. I also bake cakes like lemon basil, which is a signature flavour that I have. I do strawberry, carrot, banana nut; sometimes I try mixing and matching flavours like an orange spice, which is an orange cake with regular spices. It tastes really good.

using social media. At the time it was Facebook. We didn’t have Instagram then. When I started to post pictures on Facebook, I got inquiries. While building my brand, my quality and consistency grew and I began improving upon my craft. So word of mouth has also helped spread the word.

HOW ARE SALES GOING? JOYEUX: As I said before, it depends on the season. On a busy weekend I can sell up to eight cakes.

HOW MUCH DEMAND IS THERE FOR YOUR PRODUCT? JOYEUX: There are times when things are slow but you have to know how to balance. There are particular months, like August, you find are slow because parents are preparing for school. July is usually a heavy wedding month so that’s where the balance comes in. Christmas is also a heavy cake season but in January, February and even March sometimes, things become slower.

HOW DID YOU GROW YOUR CUSTOMER BASE? JOYEUX: I started to build my clientele

YOUR CAKES, HOW MUCH DO THEY COST? JOYEUX: Because my cakes are custom, there’s a wide price range. A basic cake can go anywhere from EC$145 and, based on many factors, it can go for more. Time spent, gas used, electricity, transportation and ingredients all play a role in determining price.

This six-tier suspended wedding cake is just a sample of Joyeux’s remarkable talent.

DO YOU DELIVER THE CAKES YOURSELF? JOYEUX: Wedding cakes excepting, I provide two options. I do deliveries islandwide but that comes at a fee. And

also customers have the option to pick up the cakes themselves. I don’t allow wedding couples to pick up their cakes because of the occasion. I don’t want anything to go wrong.

DO YOU EMPLOY ANY STAFF? JOYEUX: No I don’t. It’s just my partner and me, and before that it was just me.

DO YOU SEE THE BUSINESS GROWING TO THE POINT WHERE YOU WOULD NEED STAFF? JOYEUX: I would like the business to grow beyond what it is now but, because of our state of affairs in Saint Lucia, it’s kind of difficult to see where it’s going in terms of expanding. I’d have to look into producing other things besides cakes. For instance, I do buttercream, so that’s one of the things I’m looking at in terms of expanding.

If you’d like to purchase one or more custom baked cakes, you can contact Sweetdreams Cakes on 485 6465 or via its Facebook page at http://www. facebook.com/sweetdreamscustomc

The Saint Lucia Registry of Companies & Intellectual Property Company Incorporations Name: Elite National & Land Tours Inc

Name: Velocity Power Sports Inc.

Description: Water sports and tours

Description: Water sports, rentals and tours

Directors: Ossie James, Jyoti Michael

Directors: John Hill, Markel Francis

Date Incorporated: 25/7/19

Date Incorporated: 8/8/19

Chamber: John & John Inc.

Chamber: Amicus Legal

Name: UB Tours Ltd. Description: Land and sea tours Directors: Paul Chitolie

Name: Garmaz Ltd. Description: Holding company Directors: Tristan Alvarado, Laura Fonseca Date Incorporated: 13/8/19

Date Incorporated: 26/7/19

Chamber: Corporate Services St. Lucia (1996)

Chamber: SEDU

Limited

Name: Castang 5 General Construction Ltd.

Name: Data Point Solutions Inc.

Description: General construction

Description: Data processing & statistical analysis

Directors: Henry Lawrence

Directors: Edwin St. Catherine, Bretney Anthony

Date Incorporated: 5/8/19 Chamber: SEDU

Date Incorporated: 13/8/19 Chamber: Self-incorporated Name: Crave Interiors and Exteriors Limited

Name: Mangal Trading Inc.

Description: Interior and exterior design

Description: Agriculture produce and sales

and decoration

Directors: Nila Mangal

Directors: Carol Henry, Vera Dolor-Henry

Date Incorporated: 6/8/19

Date Incorporated: 13/8/19

Chamber: SEDU

Chamber: Self-incorporated

FOREIGN RELATIONS / TAIWAN

THE STAR BUSINESSWEEK

SEPTEMBER 7, 2019

TAIWAN IS TRADING FOR ITS FREEDOM

BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT

F

or the Republic of China (hereafter called Taiwan) 2019 is seeing it face a greater threat to its way of life than it has for many years. The islandnation of 23 million has always faced an existential danger since those who claimed it to be China’s rightful government moved in exile to the island in 1949, the mainland ruling Communist Party of China (CPC) holding the island to be part of the People’s Republic of China (hereafter called China). But for seventy years the nation has hung on and grown into a prosperous, democratic society.

The world looks very different in 2019 than it did in 1949. Recent years have seen China not only test the status quo of co-existence between Taipei and Beijing, but begin work to actively drive it to the brink. In this climate Taiwan knows that the next ten years won’t be anything like the last seventy, and it must secure allies on which it can rely, not only for the next year but in perpetuity.

Can it really do this? And in what ways?

A DECLINE IN RELATIONS RAISES THE STAKES Although nobody would mistake Beijing and Taipei for allies, the past decade saw a cooling of tension, and warming of relations. However, since the ascension of Tsai Ing-wen to Taiwan’s presidency in 2016, relations have soured. Depending on your perspective, this is a result of either Ing-wen’s rejection of reunification, or the Chinese government’s rising power and growing impatience with Taiwan not coming under its control, or a combination or both. Either way, it’s undisputed that Beijing, having successfully lured many diplomatic allies away from Taipei in recent years, has weakened Taiwan’s standing internationally.

The critical danger for Taiwan in this scenario is the recent shifts of nations like Panama, the Dominican Republic and El Salvador, giving rise to a perception of inevitability. Taiwan now has under twenty allies remaining

Taiwan has built a prosperous, democratic society. But storm clouds may be gathering in its future. (Image: Pixabay)

who officially recognise it. So is it a hopeless cause for nations to stay linked with Taipei instead of switching over to Beijing?

This is a perception that Beijing would like to actively encourage.

However, new woes have arisen domestically and in foreign policy for Beijing, which means that many nations no longer accept its narrative of perpetual progress and economic growth. Put simply, China will have to work harder to grow in future than it has done in years prior, and this informs the dynamic between Beijing and Taipei.

THE LAND OF THE FREE LEADING NEW TRADE In generations gone by, many powerhouses in global manufacturing would produce much of their output in-country. Today, a piece of tech designed in America could well have Japanese metals and South Korean components, and be assembled in Taiwan. A free trade agreement (FTA) between the US and Taipei would be a benefit to both nations, and streamline numerous supply chains.

In order to entice nations in Latin America (LATAM) and further afield to commit to Taipei for the long-term,

Taiwan needs to pursue the sort of economic ties that make a break to Beijing unthinkable. This is no easy task to do. Yet there are avenues here where Taipei can not only build new foundations, but also drive home the differences between it and Beijing in a future relationship.

The most important FTA for Taipei to pursue at present, to benefit its standing in the region, is actually with Washington. Taiwan isn’t just after economic growth; it needs enhanced diplomatic clout, and while the US has long served as a security partner with Taiwan, the policy since the Carter administration — of ‘strategic ambiguity’ surrounding to what extent it would intervene, should Beijing invade— has seen other nations diminish their relationship with Taiwan.

Now, as the US government identifies in Beijing a challenger, and although the Trump administration is overall not famous for its foreign policy consistency, it has been credited as being the first in many decades to push back comprehensively against Beijing’s growing ambitions and territorial incursions. An FTA between Washington and Taipei would be a clear signal of America’s commitment to Taiwan’s future, and Washington’s support of it.

SPEAKING A COMMON LANGUAGE What Taiwan can offer smaller LATAM nations is a shared sense of vision and determination to be independent as a smaller nation. Usually, a country of 23 million that recorded a (nominal) GDP of US$573 billion in 2017 would not be classified as a little nation but its geographic positioning and standing in the world, relative to its colossal neighbour, means it has pursued the path in diplomacy of a bulldog instead of a bear. In doing so, it can speak a common language with Caribbean nations, and without the strategic concerns that a deal with the CPC in Beijing involves.

This manifests itself in alliances that are respectful of independence and free societies, something the CPC in Beijing cannot offer now, or promise in future, given the ongoing concerns surrounding

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Huawei’s 5G network, debt-trap diplomacy, and other issues relating to the Chinese government’s Belt and Road initiative or its contentious reunification of Hong Kong.

Despite this, it’s not all rosy for Taipei in the Caribbean. Taiwan retains a strong fossil fuels industry.

Just as Taiwan is threatened by China, so too are Caribbean nations threatened by climate change in which Taiwan remains a notable contributor.

This is unquestionably an odorous element of Taiwan’s foreign policy platform in the region.

Nonetheless, while Beijing likes to advertise its environmental credentials and has sought to appoint itself the leader of the green initiative globally in the Trump era, concerns have also been raised surrounding its commitment to green energy domestically, with accusations that chemical plants continue to engage in clandestine pollution, notably in the Hebei province in which the capital of Beijing resides.

TAIWAN’S WINDOW OF OPPORTUNITY The value of China’s economy in relative terms isn’t going anywhere, but the increased tension between Washington and Beijing has meant that many nations have paused in, or stepped back from, greater engagement with China, whether by choice or by the gulf created as a result of the brewing trade war between the world’s two largest economies.

It’s not only trade tensions that have seen Beijing under new scrutiny. The instability in Hong Kong, high profile arrests of Canadian nationals, among others — seen by many as a form of political payback for scandals such as the arrest of Huawei executive Meng Wanzhou in December 2018 — and slowdown in China’s economy have all taken the lustre off Beijing’s bold declaration of its future promise.

For Taiwan there is an opportunity here. LATAM nations that were once considering a shift to Beijing now recognise that the rising power may have a bumpy road ahead. Seizing on this opportunity means ensuring that existing relationships are cemented, and any new ones are pursued SBW in the same spirit.

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THE STAR BUSINESSWEEK

SEPTEMBER 7, 2019

WWW.STLUCIASTAR.COM

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