Two Chinas Battle for Influence

Ever since Costa Rica broke off relations with Taiwan in June to establish ties with communist China, desperate Taiwanese authorities have been scrambling to prevent further defections. At an international conference held in August in Tegucigalpa, the leaders of Belize, Guatemala, El Salvador, Honduras, Nicaragua, Panama and the Dominican Republic pledged to back president Chen Shui-bian and his long-shot struggle to win UN membership for Taiwan. It did not hurt that the president reportedly vowed to invest $1 billion in infrastructure, environmental and energy projects throughout Central America.

Taiwanese authorities insist that it is not all about money, and people close to the government say the actual spend will fall well short of $1 billion. But cold hard cash and the promise of enormous new trading opportunities with China seems to have beaten Costa Rica's long-cherished embrace of freedom and democracy. According to Joseph Wu, Taiwan's top diplomat in Washington,...