Nearshore Americas

Latin America and the Twilight of China’s Stadium Diplomacy

China has a long-standing policy of building sports stadiums in poorer countries. The policy, which has been around since China first built the Mogadishu Stadium in Somalia in 1978, usually has a tie-in with strategic economic or political interests.  The biggest effort, by far, has been in Africa, where the Asian giant has built 34 stadiums. However, Asia and the Caribbean have also benefitted.

In Latin America, the only high-profile example is Costa Rica, where China helped build the National Stadium in 2011. The investment came after Costa Rica broke off diplomatic ties with Taiwan in favor of China. This was a coup for communist China, which has struggled for years to counter the tendency of smaller countries, particularly in Central America, to officially recognize Taiwan as “China”.

It was also a boom for Costa Rica, which got more than the US$100 million invested in stadium construction. China bought the national police force patrol cars, provided credit for fixing up an oil refinery, bought US$300 million in bonds, and set up a US$400 million loan for public transit and road construction. China also established a pro-China Confucius Institute in the capital, San José, and, perhaps most importantly, inked a free trade deal – for which normalized diplomatic relations was a pre-condition.

LatAm Out in the Cold

But the free-trade deal, which was signed in 2008 as stadium construction began, foreshadowed a diplomatic truce between Taiwan and China that has held to this day, and that has put stadium diplomacy on hold. Taiwan’s president Ma Ying-jeou took the lead in 2008 by declaring a “diplomatic ceasefire”. In effect, Taiwan has promised not to emphasize building formal relations with small countries, and instead now works on stronger relations with mainland China, and informal ties with the world’s larger economies.

So far, it’s held, which means fewer stadiums and less check-book diplomacy in Latin America. But that hasn’t stopped China from leveraging its relationship with Costa Rica. When meeting with Costa Rican President Luis Guillermo Solis in Brazil in July, Chinese President Xi Jinping likened the relationship between the two countries as being “like a growing elephant-ear tree of the Americas.” That reference was clearly intended for the right audience, given that the tree, native to the Americas, can be found from Mexico to Brazil.

During the heyday the real surge in the region was not in Latin America – it was in the Caribbean basin. For example, China funded Suriname’s Anthony Nesty Sporthal in 1987, followed by Barbados’ Garfield Sobers Gymnasium in 1992, and St. Lucia’s George Odlum Stadium in 2002. Then 2007 saw a surge of investment: the Sir Vivian Richards Stadium in Antigua in 2007; Windsor Park in Dominica; Queen’s Park Stadium in Grenada; and the Sligoville mini-stadium in Jamaica. After five years of inactivity, China then built the Bahamas National Stadium in 2012, which can be seen as an anomaly as it appears not to be connected to the Taiwan issue.

Today, five Caribbean countries recognize Taiwan: Belize; Dominican Republic; Haiti; Saint Kitts and Nevis; and Saint Lucia. None of them have had stadiums built, other than St. Lucia, which switched allegiance back to Taiwan in 2007. Immediately after St. Lucia re-opened diplomatic ties with Taiwan, China cut off relations with the small Caribbean island.

Pick Your China

This obsession with recognition between the “two Chinas” dates to the Chinese communist revolution in 1949, when nationalist forces led by Chiang Kai-shek escaped to the island of Taiwan, and formed a government claiming to represent all of China. Known officially as the Republic of China, Taiwan embraced a market friendly economy. Allied with the United States, it gave aid to smaller countries to secure their diplomatic support and their votes at the United Nations. Now the tides have turned, with the cash rich and resource hungry Peoples Republic of China acting as the new power broker.

But as the truce between the two Chinas has held, other small Central American countries have been left out in the cold – and without fancy stadiums. El Salvador, Guatemala, and Honduras maintain official diplomatic relations with Taiwan. Honduras, which could do with a stadium and had a decent showing at this year’s World Cup, attempted to open relations with mainland China in 2009. However, China, respectful of the diplomatic ceasefire, demurred in order to keep the peace. For its part, Nicaragua has refused to allowed Taiwan or China to condition its relations, and recognizes both countries.

In Spanish and Portuguese-speaking South America, there is no appetite for stadium diplomacy. The reasons are simple: with the notable exception of Paraguay, every country recognizes the Peoples Republic of China, and all have a tendency to have a nationalistic relationship to sport. Having a foreign country finance a stadium might wound national pride, and wouldn’t necessarily change their economic or political fortunes. As it stands, they can pursue trade and investment without the appearance of a bribe, and keep their political and cultural integrity intact.

At this stage, most analysts see the stadium phenomenon more as diplomatic and cultural PR than as direct economic development.  Alan Romberg, East Asia Program director of Washington-based Stimson Center, says that a majority of countries “don’t really care about the diplomatic formalities” related to the issue. As well, Kweibo Huang, a professor of international relations at National Chengchi University in Taipei, Taiwan, says that there is now less money on the table, given that Taiwan’s foreign ministry budget has been squeezed to the point where it can no longer afford new client-state relationships.

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As it stands, with the notable exception of Paraguay and some small countries in Central America, most countries in Latin America already have full relations with mainland China, and can pursue economic relations with no need for China to build stadiums. If China likes a country’s politics, as it has with Ecuador and Venezuela, it will offer loans at rates lower than the IMF, the IADB, or any country or private lending agency.

But that doesn’t mean China only plays politics, or that it will stop tying aid to its economic interests. China will continue to support its well-deserved reputation for pragmatism, and it will engage when it suits its interests – as opposed to the United States’ market driven Washington Consensus, which is more neutral in its promotion of highly prescriptive, market-friendly reforms. Countries in Latin America (and beyond) will look on with keen interest to see which way the Asian giant will turn, and where it might tie investment with its political interests – particularly given that China’s GDP is set to surpass US$10 billion this year.

Tim Wilson

Tim has been a contributing analyst to Nearshore Americas since 2012. He is a former Research Analyst with IDC in Toronto and has over 20 years’ experience as a technology and business journalist, including extensive reporting from Latin America. A graduate of McGill University in Montreal, he has received numerous accolades for his writing, including a CBC Literary and a National Magazine award. He divides his time between Canada and Mexico. When not chasing down stories, he is busy writing the Detective Sánchez series of crime novels.

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