Taiwan wins over $200M in legal claims against African states

DAKAR/TAIPEI (Reuters) - A state-run Taiwanese bank has successfully sued two African countries for $212 million in unpaid loans and brought a claim against a third, court documents showed, in a possible warning to allies who switched sides in Taiwan’s spat with China.

The three claims brought by the Export-Import Bank of the Republic of China before a US district court against Guinea Bissau, Central African Republic and Democratic Republic of Congo amount to a total of at least $261.4 million including loans and interest.

The first case is pending and the other two Eximbank won.

“We see this as a commercial loan case,” Johnson C T Liao, vice president and spokesman for Eximbank, told Reuters. He said most of Eximbank’s loans are international and are repaid.

“Usually there is a long period of negotiation. Then when we can’t find a way, we have to go through the legal process to protect the debt claims,” Liao said.

But analysts say the legal action by Eximbank, which falls under Taiwan’s finance ministry, is likely to be a warning about the costs of forging diplomatic ties with China.

Guinea Bissau and Central African Republic have withdrawn support for Taiwan since the loans were disbursed and Congo did not ditch China even after receiving the money.

Taiwan’s foreign ministry said it could not comment on the matter because the case involves commercial loans. A Guinea Bissau official said the government was committed to responding to this claim under the rule of law but that its first priority is the welfare of its people and stability of the country.

Officials in Congo and Central African Republic did not respond to requests for comment.

“It is not surprising that Taiwan would seek repayment from nations that switched allegiance,” said The Atlantic Council’s Robert Manning, noting new tensions in China-Taiwan relations since the election of Tsai Ing-wen as president last year.

Tsai is also the leader of a ruling party that traditionally advocates independence for Taiwan, a red line for Beijing.

“It is in part about getting their money back, but in no small part, a bit of retribution,” Manning said.

All the claims filed at a district court New York State and seen by Reuters are for loans dating back to the early 1990s — a period when Taiwan and China used “dollar diplomacy” to attract allies in Africa after the end of the Cold War.

The borrowers each failed to repay any principal and most of the interest on the loans, the filings showed.

Taiwan has competed with China for recognition since defeated Nationalists fled there in 1949 at the end of China’s civil war, but the tables turned in Beijing’s favour in the 1970s when the United Nations and United States switched sides.