The Honduran government’s decision in 2023 to end diplomatic relations with Taipei in favor of Beijing came as a blow to Taiwan’s diplomatic presence in Central America. Two years later, after promises of large-scale investment in infrastructure development and aid from China, the economic and trade benefits of the decision to shun Taipei have fallen short of expectations. The price that local industry has paid is increasingly clear.
In the country’s recent, as yet unresolved general election, both major candidates during campaigning pledged to sever ties with Beijing and re-establish diplomatic relations with Taipei. That possibility is set to become a touchstone for Taiwan’s diplomatic pull in Latin America.
The promise of development, investment and infrastructure support was a key motivator for Tegucigalpa in its 2023 move. The political approval of Beijing was clear, and it quickly followed through with substantial trade deals and investment packages — including a cooperation agreement worth more than US$270 million to boost education infrastructure.
For China, attracting Central American nations to pursue diplomatic relations with it was a surefire way to boost its position and undermine Taiwan; for the Honduran government, the speed and breadth of the agreements provided an answer to voters’ expectations for change with a promise of immediate results.
Neighboring Guatemala has taken an alternative path in its Taiwan strategy and, having long maintained diplomatic relations and repeatedly voiced support for Taiwan, provides a useful point of reference. The long-term relationship between Taiwan and Guatemala has benefited both countries through exchanges in agricultural technology and academia, as well as trade. Economic ties with and aid from Taiwan have provided a tangible boost to development there.
Although the diplomatic split from Taiwan in Honduras did provide it with immediate gains — valued in the millions — the expected benefits to local industry and trade relations never quite materialized. Instead, plummeting whiteleg shrimp exports have driven the industry to the point of collapse, resulting in widespread job losses. That was not the “China dividend” the public had hoped for.
Guatemala’s case highlights how long-term, small-scale and targeted cooperation — the kind of soft power in which Taiwan specializes — can often prove more effective than one-off, large-scale financial commitments in delivering stable and sustainable economic benefits.
The whiteleg shrimp industry was once a central pillar of trade between Taiwan and Honduras. When Tegucigalpa had diplomatic ties with Taipei, Taiwan was its largest shrimp export market, which helped boost local jobs in CNC machine operation, transportation logistics and other parallel industries. After the split, the loss of preferential agreements significantly reduced trade. With Chinese demand failing to make up the difference, plummeting exports and profitability have led to factory closures and more than 10,000 job losses.
Far more than an isolated fluctuation in supply and demand, the crisis demonstrated how foreign policy decisions can quickly undermine entire supply chains.
Those were the conditions that prompted the issue to rise to prominence in the Honduran election, with candidates invoking official data and the state of local industry to back up their campaign rhetoric.
It is natural that foreign policy can become a hot topic in an election season when economic interests and the livelihoods of its people are concerned. Candidates who supported re-establishing diplomatic ties with Taiwan in Honduras could appeal to voters affected by losses in the whiteleg shrimp or agricultural industries with promises of a market rebound and the return of jobs. Those who advocated sticking with Beijing could emphasize benefits from large-scale investments and eventual integration into Chinese markets.
The choice for voters was between China’s immediate cashflow and support for engineering projects or a steady partner for trade and technology transfers in Taiwan — a decision that working-class people would be expected to make based on their expectations for employment and earnings.
The salience of the issue for Hondurans is why the Taiwan question has featured so prominently in the elections.
With the possibility of re-establishing relations on the horizon, Taiwan must be swift and pragmatic in its strategy. First, it must launch an assistance program with technological and quarantine support to reconnect trade and agricultural supply chain links. That would facilitate the immediate resumption of Honduran whiteleg shrimp and coffee exports to Taiwan.
Second, financial assistance or loan guarantees must be provided in the short to medium term to ensure that affected industries can recover and retain workers.
Third, it must boost cooperation on education, healthcare and technological training to rebuild trust at the local and grassroots levels.
Those measures would be felt by voters and local industries far more deeply than any diplomatic declaration.
Taipei should prepare for legal, quarantine and trade negotiations as a matter of urgency — and be ready to hit the ground running if bilateral relations are indeed re-established.
The future of Honduras’ diplomatic allegiance has implications for US interests in Central America, given its concern over China’s regional influence. In the process of restoring diplomatic ties — or simply supporting Honduras to step back from China — Taiwan can assist in making Honduras’ path forward more workable by coordinating with the US and other like-minded countries to provide financial, technological and diplomatic support.
Framing it as a plan of mutual gain rather than one-way assistance is key to ensuring its appeal and sustainability.
Faced with Beijing’s sustained strategy of poaching diplomatic partners whenever it can, Taiwan should pursue a dual-track policy in response. Partnerships with countries such as Guatemala must be retained, and political trust bolstered through close cooperation and regular exchanges. At the same time, Taiwan must shift the focus of its foreign policy from the number of its diplomatic partners to international visibility and levels of practical engagement. Influence on the global stage can be expanded through technology diplomacy, local governmental engagement and people-to-people exchanges.
Although the number of countries with which it maintains diplomatic ties might fluctuate under pressure from great powers, Taiwan can maintain its international standing and friendly relationships by continuing to uphold its values and practical contributions to the global community.
Whatever decision Honduras makes is set to be more than just a reflection of Beijing’s performance as a partner over the past two-and-a-half years, but a litmus test for whether Taiwan’s soft power and economic ties can translate into real political pull. If the incoming Honduran government restarts diplomatic relations with Taiwan, moving swiftly and pragmatically on targeted cooperation efforts would be key to cementing the relationship.
If Honduras remains aligned with China, persistent economic pain in local industries and the tide of public opinion might set the stage for a shift later.
The situation is about more than Taiwan’s diplomatic standing with a single country — in the context of a wider Indo-Pacific strategy, it is about Taiwan proving its worth as a partner.
Chien-chien is a graduate student.
Translated by Gilda Knox Streader
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