On September 7, ROC President Lee Teng-hui addressed the multi-lateral Panama Canal Conference. This is the first time an ROC head of state has attended an international meeting since the Cairo Conference over 50 years ago.

Besides strengthening political and economic ties to the region, Lee used the trip to emphasize on several occasions that Taiwan would not be isolated, and that however much the PRC attempts to isolate Taiwan, it cannot change the fact of the ROC's existence as a sovereign state.

On September 4, 1997, President Lee Teng-hui left on a 16-day trip to Central America, his sixth trip abroad since becoming president. (He previously visited Singapore, the Philippines, Indonesia, and Thailand; attended the inauguration ceremonies of the president of South Africa; visited the United Arab Emirates and Jordan; and spoke at Cornell University in the US.) Destinations this time were Panama, Honduras, El Salvador, and Paraguay, long-standing friends who have maintained diplomatic ties with the ROC. Besides signing communiqu廥 separately with the four heads of state and addressing each country's legislature, Lee attended the Panama Canal Conference and the summit meeting of Central American heads of state.

Lee first stopped over in Hawaii. Though the stopover was low-key, and no official events were scheduled, it was different from last time, when Lee was not allowed off the plane. This time he stayed two days, visiting Chang Hsueh-liang (the 97-old initiator of the 1936 Xian incident) and playing golf with the former governor of Hawaii. Also, the new head of the American Institute in Taiwan, Richard Bush (who had just been appointed that morning), met Lee's plane in Hawaii, showing the friendly attitude of the US Department of State.

Lee arrived in Panama, his first destination, on September 6. He received a very enthusiastic welcome from Panamanian President Ernesto Perez Balladeres, who even lent Lee his official car. Before the Canal Conference, President Balladeres, as the host, took other heads of state on a jeep ride to inspect the canal. At the opening ceremonies that night, the two presidents sat side-by-side, with Balladeres even kindly helping Lee adjust his headphones for the simultaneous translation. These small gestures illustrate Balladeres' friendship in inviting Lee to attend and give a speech, despite strong pressure on Panama from the PRC.

The Panama Canal Conference was mainly a technical meeting, paving the way for Panama to take control of the canal at the end of 1999. All those invited have connections to the use and management of the canal; Taiwan does not exclude the possibility of future investment. At the conference President Lee stressed the ROC's willingness to fulfill its international responsibilities. As a friend to Panama and a major user of the canal, Lee said, Taiwan would contribute maximum effort to the sustainable management of the canal.

Besides attending the conference, Lee also strengthened bilateral economic ties with Panama. He and Balladeres attended the ceremony marking the opening for use of the Fort Davis Export Processing Zone. Fort Davis has been jointly developed by the ROC and Panama, a large investment similar to the Subic Bay (Philippines) project. The first stage of construction at Fort Davis should be completed by the end of this year. There are currently eight Taiwan firms there, taking advantage of the Zone's completely tax-free status. In future the Zone will recruit investors from around the globe. Also, the two presidents watched as their ministers signed a free-trade memorandum and a small business loan memorandum. Finally, President Lee presented Panama with the Friendship II, a fishing craft equipped with the latest technology, personally delivering a model of the boat to President Balladeres.

After Panama, Lee's second stop was Honduras. In a meeting with Lee, Honduran President Carlos Roberto Reina expressed the hope that Taiwan would help establish an Export Processing Zone and establish a Central American technology research and development center, and that Pingtung Polytehnic University could cooperate with Honduras; President Lee gave concrete, positive responses on all counts. Also, at a state dinner, Lee noted the strong similarity between Reina's idea for a "moral revolution" and Lee's own "spiritual reform" theme.

Another key event on this trip was Lee's participation in the summit of Central American heads of state, held in El Salvador. Taiwan was included in the joint communiqu*. To attend this session, the ROC Presidential Office established a "Pacific Task Force" to study relations and cooperation with all Central American nations. Thus Lee's visit was called "a journey of peace."

At the summit, Taiwan reached agreement with the Central American states to establish a strategic alliance for cooperative development, and the Central American states welcomed Taiwan's participation in their future Central American Community. Given the PRC's efforts to isolate Taiwan, this would be the first regional organization in which Taiwan (though obviously not in the region) could participate. Taiwan also agreed to set up a US$300 million development fund with the Central American nations, of which Taiwan would provide US$240 million. President Armondo Calderon Sol of El Salvador noted that the region's states were engaged in economic integration and were willing to undertake political integration. The Central American Community expects to develop links with North and South America to reach free-trade agreements. Thus Taiwan's participation could prove very important.

In El Salvador, besides attending the summit, Lee had a separate meeting with President Calderon. Lee praised El Salvador for ending its civil war and for being recognized by the UN as a model of peaceful democratic reform. Taiwan donated fishing boats to El Salvador and signed a fisheries cooperation agreement; El Salvador will become a long-range fishing base for Taiwan ships.

Lee's final stop was Paraguay, the only country in South America to have formal ties with the ROC. Paraguayan President Juan Carlos Wasmosy and Lee agreed that Paraguay could be Taiwan's entr嶪 to the South American common market. The two countries also signed air-rights, agricultural, and trade agreements.

Overall, Lee's trip was fruitful. He repeatedly emphasized that the ROC is a sovereign independent political entity. He thanked Taiwan's Latin American friends for upholding their friendship with the ROC in the face of intense PRC pressure. President Lee also brought over to Central America a number of economic cooperation opportunities. His traveling party included not only political figures, but also business leaders such as Jeffrey Koo of the Chinese National Association of Industry and Commerce, Wang You-theng of the General Chamber of Commerce of the ROC, and Kao Chi-yen of the Chinese National Federation of Industries. At every stop, Lee specially introduced the three to the host head of state. Wang You-theng even personally made a promise to the president of Panama to set up an bank subsidiary. Representatives of other industries, including electrical power, aquaculture, and textiles, also went to have a look at the Latin American investment environment.

Although economic power is a key pillar of Taiwan foreign policy, and Taiwanese businessmen are happy to "provide escort," it is unclear whether they will actually invest. Judging from the tepid response to the Fort Davis Export Processing Zone in Panama, businessmen always put risk and profit first. It remains to be seen how close economic ties between Taiwan and Latin America will be.

In another respect, the ROC's participation in the Central American Community sparked much discussion in Taiwan. Though many scholars praised this as helping Taiwan re-enter international society, opposition parties argued that the cost in investment is too high. Arguing that Central America is far away, and the investment environment is unstable, they say that investments will be throwing money away. Moreover, in mid-September, when the UN resolution on Taiwan did not pass, some of Taiwan's Central American diplomatic partners did not support the resolution, making some citizens wonder about how successful ROC diplomacy there really is.

Not long ago, St. Lucia broke diplomatic relations with Taiwan, and it is not clear if Paraguay will, after its presidential election, keep ties with the ROC. Also, the PRC strongly pressured Panama and boycotted the Canal Conference, so that heads of state from the US, France, Canada, and Japan, who had originally planned to attend, all withdrew, conforming to the PRC's strategy to keep Taiwan down. The doubts of people in Taiwan about Lee's trip mirror the extreme difficulties faced by Taiwan in its foreign policy.

In the face of the PRC's efforts to isolate Taiwan, President Lee's visit to Latin America, and his planned visit to Africa next year, testify not only to Taiwan's economic power but to the fact of its existence. At the same time, amidst the discussion occasioned by the Lee trip, we saw that, aside from attracting international attention, it still remains a difficult test how Taiwan can, with the help of its allies, overcome its powerful adversary.

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The Central American summit meeting was one of the highlights of President Lee Teng-hui's trip to Central America. At the meeting the ROC was invited to participate in the Central American Community, marking a new milestone in ROC-Central American relations. (photo by Wu Kuang-hua)