The surprise here is not that they admit to the payoff, but rather, the mess the secrecy created -and with good reason. In the international articles, there is no mention that the money that Taiwan had previously donated was spent otherwise (starting with about two million USD that were supposed to be for building housing for the poor, but instead were diverted by local officials to repay favors given during the presidential campaign, among other things…), and that money was handled by the same people now “taking care” of PRC’s “assistance”. Not a good omen.
Oh, that, and the funny note by the President Arias insisting Taiwan’s secret service found out about the deal -when he himself said the ROC was stingy (meaning if they had paid up 300 mill, maybe it would be business as usual).
[quote]As part of an incentive package to persuade Costa Rica to shift its diplomatic recognition from Taiwan to China last year, China used the muscle of its enormous foreign exchange reserves, agreeing to buy $300 million of Costa Rican bonds, documents released in Costa Rica this week revealed.
The deal shows that China is using its $1.8 trillion in foreign exchange reserves, the world’s largest such cache of foreign currency, to further its political goals, despite promises that it would not do so.
As China’s economic might has risen in recent years, so has concern about its international reach, particularly in the United States. China is thought to be the largest foreign holder of United States government-backed debt, and bankers estimate that $1 trillion of China’s total foreign exchange reserves are in American securities.
The terms of the agreement were meant to be kept secret, according to La Nación, a Costa Rican newspaper, but the government was forced by the constitutional court to publish the memorandum of understanding signed by both countries, as well as other documents. The court considered the information to be in the public’s interest.
The memorandum, posted on the Web site of Costa Rica’s Foreign Ministry, is dated June 1, 2007, the month that China and Costa Rica established diplomatic relations, and it is co-signed by Yang Jiechi, China’s foreign minister.
The memorandum states that in return for Costa Rica’s shutting its embassy in Taiwan and expelling Taiwanese diplomats, China agreed to buy $300 million in bonds.
It also agreed to give $130 million in aid to Costa Rica, as well as other incentives, including 20 scholarships each year for Costa Ricans to study in China.
The documents show that the Chinese State Administration of Foreign Exchange, the secretive organization that is the steward of China’s foreign exchange reserves, agreed to buy $150 million in state bonds, with a term of 12 years and carrying an interest rate of 2 percent per year, in January of this year and a further $150 million in January 2009.
La Nación reported that the Costa Rican finance minister, Guillermo Zúñiga, had warned this week that the decision to make the details of the agreement public could jeopardize the purchase of the second set of bonds by China. It quoted the Chinese ambassador to Costa Rica, Wang Xiaoyu, as saying that China was now assessing the impact on relations between the countries.
If you read Spanish: http://www.nacion.com/ln_ee/2008/septiembre/13/pais1699840.html
“There are no lies here. The only lie was when they asked me whether we would break off and I said no… Taipei’s intelligence caught me in the lie”.
Forgot to add an interesting quote from today’s Taipei Times:
[quote]Taiwan’s Ministry of Foreign Affairs (MOFA) spokesman Henry Chen (陳銘政) said yesterday : “The truth of why Costa Rica broke up with us has finally been revealed.”
“It just goes to show that if we had continued to engage in a hostile diplomatic race with Beijing, Taiwan would unquestionably have been crushed,” he said.
Chen said for the year 2008 to 2009, MOFA’s budget has been roughly earmarked at US$1 billion (NT$30 billion).
“There is no way that we would be able to allocate one-third of our annual budget on cementing ties with just one country,” he said.
“This goes to show that a modus vivendi is necessary so we can avoid playing this money game [with Beijing],” he said.