Economy threatened as gov’t unable to repay debt to Taiwan

GRENADA, St. George’s: Government will continue to explore a diplomatic solution to the current impasse with Taiwan over a US$28 million debt (principal and accrued interest) and the resulting court judgments against the country.

In a meeting last week with members of the executive of the Grenada Chamber of Industry and Commerce (GCIC), Prime Minister Tillman Thomas said the situation was of national importance and that his government was working diligently on it.

“Due to the current financial situation facing us and the global realities, Grenada is unable to meet the demand for full payment to the Taiwanese, so we are looking at all our options,” he said, adding that the current situation demonstrates the importance of “meeting our financial obligations”.

These options include calling on “friendly” countries, both within and outside of the region, for assistance to repay the debt that was incurred by the previous government which had friendly ties with Taiwan.

“There have been statements in some quarters that when you incur debt, no one can come in and sell your country, but this is a clear demonstration of what can happen if you do not meet your obligations to your creditors,” Tillman said.

Grenada was unable to honour its debt to Taiwan’s Export-Import Bank which it incurred in the 1990s. This was because of the drop-off in tourism following the September 11, 2001 terrorist attacks in the United States and Hurricane Ivan in 2004.

Grenada’s problem stemmed from the country’s decision to sever diplomatic relations with Taiwan in favour of China. Both Taiwan and China have been investing millions of dollars in loans and grants, mostly to build infrastructure in developing countries, to gain favour and support, especially at the United Nations. Taiwan broke away from mainland China and has determined itself to be an independent country while China continues to insist it is – and always will be – a part of China. Taiwan currently has no standing at the UN where China holds a veto.

Lawyers representing Taiwan have filed papers in the U.S. compelling cruise lines and airlines to hand over any money they owe Grenada in fees or other payments. This, the government says, will cripple its economy. One cruise line has already cancelled 20 visits to Grenada for the upcoming season.

The government says it has approached the Taiwanese to renegotiate the loans, but those efforts were rebuffed.

Finance minister, Nazim Burke, says the government will challenge the Taiwanese effort in court, arguing that it is a violation of its national sovereignty. It has also claimed that since the loans were taken out by the previous administration, it should be given more leeway to work out a payment plan.

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