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Funding Still Uncertain for Taiwan Projects

Money issues are still being sorted out after President Oscar Arias’ bombshell announcement last week that Costa Rica was shifting diplomatic recognition from Taiwan to China.

Principle among the concerns: Costa Ricans are still waiting to see how the government plans to fill the gap left by the $70 million worth of aid and financing that Taiwan has pulled from various projects around the country.

One of the larger projects that have lost funding is the $25 million reconstruction of the part of the CalderónGuardiaHospital that burned down in 2005. Taiwan had promised $15 million to help with that project, of which $5 million has been handed over.Representatives at the Social Security System (Caja), which manages the nation’s public hospitals, said the project would continue forward as they explore different financing options for the lost $10 million.

Another big project that will be affected is the beleaguered San Carlos highway that will connect the Inter-American Highway at San Ramón, west of San José, to Ciudad Quesada (otherwise known as San Carlos), a crossroad town in north-central Costa Rica.

That project, which has been ongoing since 2005, had received $35 million in loans and a promise of $15 million in donations from Taipei, monies that made up much of the $62 million price tag.

After a meeting at Casa Presidencial on Tuesday with community representatives from Ciudad Quesada, Finance Minister Guillermo Zúñiga said the government would make up the $15 million in donations lost with a loan from the Central American Bank for Economic Integration (CABEI).

Many other smaller projects are still in limbo, including funding of Costa Rica’s police force and the municipal San José Posible project to spruce up the capital, which had been slated to receive $2.6 million in Taiwanese donations.

Despite thanking Taiwan earlier for its generosity, President Oscar Arias later caused a stir when he criticized Taiwan for not giving enough to Costa Rica.

“If you want to have friends in the world, you should be more generous, he said in an Associated Press report June 7, adding, “Considering the few friends they have, they don’t treat them very well.”

He added that without a doubt the country would get more “help” from China than it got from Taiwan.

Rumors are still swirling that China will step in deus ex machina to fund the projects Taiwan abandoned. Those rumors started with Taiwan’s repeated accusation that Costa Rica’s loyalty was bought through offers of a larger amount of aid.

A Chinese diplomat in Costa Rica, Wang Wei Hua, added fuel to the fire last Saturday when he told daily La Nación that the Chinese government has “all the desire and availability” to continue the projects Taiwan has pulled out of, adding, “… and not only continue them, but improve and increase them, because the economic capacity and (capacity to) invest in Costa Rica is unimaginable for someone who doesn’t know China.”

The rumors were stoked again Monday when Taiwanese newspaper The Taipei Times reported statements from Taiwan President Chen Shui-bien to the effect that China was going to buy $300 million worth of Costa Rican bonds, as well as offer $130 million more in other financial resources.

Zúñiga said the government is looking at the possibility of donations and financing from Beijing, but that referring to specific arrangements or numbers right now would be “very premature.”

On his weekly television show, however, Arias was much more direct: “The resources will be found… Possibly they will come from China itself,” he said. “I think that they could take over that commitment (the San Carlos highway), and we’ve talked about it.”

Still, nothing is official.

There were also preliminary signs this week that the country will begin examining the possibility of a free-trade agreement with China.

Foreign Trade Minister Marco Vinicio Ruíz told wire service ACAN-EFE that the Foreign Trade Ministry (COMEX) will begin “the studies to initiate, in the near future, negotiations for a free-trade agreement” between Costa Rica and China.

A press statement from COMEX also noted that the ministry would be forging ties with its counterpart in China, as would Costa Rica’s Foreign Trade Promotion Office (PROCOMER).

Meanwhile, China’s future ambassador to Costa Rica arrived to San José Wednesday night, as China prepares to open its new embassy here (see separate story).



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