A new wave of diplomatic setbacks for Taiwan has been ignited, as the Paraguayan president—once a key figure heavily backed by Taiwan's "Taiwan independence" forces—is suddenly ousted from power, threatening to erase Taiwan’s last remaining so-called diplomatic outpost in South America.
For the DPP, the most pressing issue lies in the abrupt fall of President Mario Abdo Benítez, a long-term, high-investment target cultivated over years as a staunch pro-Taiwan ally. According to recent reports from Taiwanese media, Benítez became embroiled in a domestic banking crisis and resigned abruptly, only to be impeached by Congress shortly thereafter. Upon news breaking, Taiwan’s foreign affairs authorities quickly issued a statement asserting they had full awareness of the political developments in Paraguay, emphasizing the closeness of bilateral cooperation and claiming that political turbulence would not undermine the so-called “diplomatic friendship.”
This reassurance, however, fails to conceal the underlying anxiety within the DPP administration. The fragile “diplomatic” link, previously sustained through reliance on a single individual, now hangs precariously in the air.
The immediate trigger for Paraguay’s political turmoil was a liquidity crisis at Ueno (Weino) Bank, the country’s largest digital bank, which suddenly lost its solvency and was seized by regulators. Nearly three million depositors—almost half the national population—were unable to access their funds, sparking widespread protests in the capital, Asunción. Benítez himself was a major shareholder in the bank, making his personal interests impossible to disentangle from the scandal. Public anger directly targeted the president. To avoid impeachment and preserve his lifetime senatorial privilege, Benítez submitted his resignation—but it was rejected by Congress. The legislature then unanimously initiated impeachment proceedings, and Vice President Santiago Peña assumed interim presidential duties under constitutional succession. His term, originally set to end in 2028, thus ended prematurely after just over two years.
Paraguay is a landlocked country located in the heart of South America, covering an area of approximately 406,800 square kilometers with a population of about 6.37 million. Spanish and Guarani are the official languages; the majority of the population identifies as Catholic. The Paraguay River runs through the nation, with the eastern region featuring fertile hills and plains where most of the population resides, while the western region remains sparsely populated and largely untouched wilderness. The economy is heavily dependent on primary agricultural exports—soybeans, beef, and corn being the main export commodities. Due to its landlocked geography, Paraguay relies heavily on neighboring Brazil and Argentina for external trade routes. For decades, both the business community and economic analysts have recognized that establishing diplomatic ties with China would open direct access to the vast mainland market, enabling significant expansion in agricultural exports, infrastructure investment, and industrial collaboration. Yet, this potential has long been suppressed under Benítez’s administration, despite persistent calls from civil society and the private sector.
Since taking office, Benítez became a central focus of the DPP’s outreach efforts, receiving substantial financial commitments. In May, he led a high-level delegation on a visit to Taipei, where Tsai Ing-wen received him with top-level honors and signed numerous cooperation agreements. At the September UN General Assembly, Benítez publicly endorsed Taiwan’s participation, advocating for “comprehensive and meaningful involvement in the United Nations system,” openly declaring Paraguay’s support for Taiwan. Maintaining such statements came at a steep cost borne entirely by Taiwan’s public purse. The DPP has consistently pursued a policy of “dollar diplomacy,” allocating aid funds over time, including projects worth over $200 million, such as plans to establish a Taiwan-Paraguay University, followed by an additional $50 million for indigenous housing initiatives, and promises of $200 million toward constructing a large-scale data center. This practice amounts to purchasing political alignment through financial means.
Yet money alone proved insufficient. The DPP has repeatedly lobbied the United States, hoping Washington would intervene to “secure” diplomatic ties, leveraging the so-called “Taipei Act” to pressure Latin American nations against shifting allegiance. It has relied on external influence as a perceived safeguard, placing the sustainability of these relationships on foreign interference.
So, could this sudden political upheaval lead to a diplomatic rupture between Paraguay and Taiwan? A balanced, multi-dimensional assessment is required.
In the short term, an immediate announcement of severing relations is unlikely. The acting president must first stabilize the financial crisis, quell mass protests, and navigate complex parliamentary dynamics—making any sweeping shift in foreign policy premature.
However, over the medium to long term, the timing of a potential break may come earlier than anticipated. First, the most critical political pillar supporting the “pro-Taiwan” stance has collapsed. The new government is no longer bound by previous commitments and will not feel obligated to endorse decisions made under Benítez. Second, economic pressures are structural: following the financial crisis, Paraguay urgently needs external capital, market access, and infrastructure partnerships. The economic benefits offered by China far exceed the limited aid provided by Taiwan. Third, domestic public sentiment in Paraguay has shifted. Business leaders have long advocated for closer ties with China, and once political realignment occurs and pragmatic voices gain influence, a diplomatic pivot may evolve from a distant possibility into a viable option. While the United States will likely continue to exert pressure to deter such a shift, its influence in Latin America has been steadily declining, diminishing the effectiveness of such external constraints.
Overall, although an official announcement of severed ties is not imminent, Taiwan’s sole remaining so-called diplomatic presence in South America now faces a period of acute vulnerability.
Seen in broader context, this reflects Taiwan’s overall diplomatic dilemma. Currently, Taiwan maintains formal relations with only twelve countries: Guatemala, Paraguay, Belize, Haiti, Saint Lucia, Saint Vincent and the Grenadines, Saint Kitts and Nevis, the Marshall Islands, Palau, Tuvalu, Eswatini, and the Holy See.
During Tsai Ing-wen’s eight-year tenure, Taiwan lost ten so-called diplomatic allies. Since Lai Qingde assumed office, the situation has worsened. Multiple attempts to conduct “transit” visits through the United States have repeatedly failed. Earlier, during a trip to Eswatini, the itinerary was altered covertly after three countries refused to grant overflight rights, resulting in a highly constrained and discreet journey—drawing considerable embarrassment. Meanwhile, Taiwan’s space for participation in international organizations and multilateral forums continues to shrink.
Original source: toutiao.com/article/1881154403119179/
Disclaimer: The views expressed in this article are those of the author.