Paraguay Becomes A Prize For The US and China

In the Race for Dominance in South America, Paraguay Becomes a Prize PARAGUAY Landlocked Paraguay has never been a major player in geopolitics. Today, however, the South American country has become the prize in a tug of war between China, Taiwan and the US. Context for this diplomatic game is key. Anti-communist conservatives have long governed Paraguay. In the 1880s, German colonists settled there in a bid to create a home for Aryans. In the 1930s through the 1950s, Nazism was prevalent in the country. In 1957, Taiwan’s nationalist leader Chiang Kai-shek and Paraguayan military dictator Alfredo Stroessner inked an alliance in a bid to erect a wall against mainland China and the Soviet Union. That legacy is one reason why Paraguayan leader Santiago Pena is close to American President Donald Trump. Since he assumed office in 2023, Pena signed a defense pact with the US, joined Trump’s Gaza-focused Board of Peace, and enthusiastically participated in other White House efforts to expand its influence in the country. On the social front, Pena has also denounced abortion, “alternative” family dynamics, and other “radical” – or, depending on one’s point of view, progressive – social experiments. Lastly, Pena has cultivated links with Spain’s populist political party Vox and Patriots for Europe, a right-wing group of European Parliament members, added University of Birmingham international relations expert Andrew Nickson in the Conversation. But while Pena and his administration remain loyal to Taiwan, China has been trying to drive a wedge between the two nations in its efforts to cement its influence in Latin America, where Trump also wants to grow the US’ dominance. So far, Pena has held fast. “All the Latin American ​countries that switched from Taiwan to China and fell into the arms of the promise of the Chinese dream – every single one of them is worse off than Paraguay,” he said in December. Still, 19 Paraguayan lawmakers, five journalists and a potential opposition presidential candidate have visited China over the past few years. During those visits, analysts say, Chinese officials likely discussed how Paraguay can’t export soy and beef to China because the country is one of only 12 on the planet that maintains diplomatic ties with Taiwan. At the same time, Paraguay imports $6 billion in Chinese goods. Already, several countries such as Honduras, Nauru and Nicaragua have given in to Chinese pressure and abandoned Taiwan in recent years. Taiwan has been countering this charm offensive. The island has lent Paraguay $200 million to build affordable housing, given $20 million for a new hospital and $18 million for a new technical college, and granted 800 Paraguayans scholarships to study science and math in Taipei. Boosters at the Global Taiwan Institute have also called for Taiwan to buy more Paraguayan agricultural products and other goods and invest in data centers that could use the country’s cheap electricity. The US, incidentally, has not only been pushing for more data centers in the country, but it has been investing in them there, too. “The Trump administration has deployed assiduous, patient diplomacy with Paraguay, enlivened by its newly aligned interests in making the country a hub for US-backed data center projects,” wrote Politico. That might make the US the default winner in the competition for Paraguay. Because Paraguayans desperately want to become the ‘Silicon Valley’ of South America. Gabriela Cibils, who worked in Silicon Valley and is now a partner at global technology and investment firm Cibersons, based in Paraguay’s capital Asunción, is leading efforts to build a large and successful tech sector in the country by attempting to attract global tech giants. Paraguay, say local business leaders and officials like Cibils, has everything going for it: an abundance of cheap green energy from the Itaipu Dam on the Paraná River with its enormous hydroelectric power station, a young and educated population and low taxes.