Honduras Foreign Minister Eduardo Enrique Reina says interest rates were very high and "choking" Honduras, and the proposal was "related to finding a debt financing mechanism for [Taiwan] to buy [Honduran] debt."

Honduras is one of only 14 countries to maintain formal diplomatic ties with Taiwan and Beijing has been stepping up efforts to win over Taipei's remaining allies.
Honduras is one of only 14 countries to maintain formal diplomatic ties with Taiwan and Beijing has been stepping up efforts to win over Taipei's remaining allies. (Reuters Archive)

Honduras has denied it had demanded $2.5 billion in aid from Taiwan before its announcement to seek to open relations with China, instead saying the country had repeatedly requested Taiwan buy Honduran public debt.

Honduras Foreign Minister Eduardo Enrique Reina told Reuters new agency the $2.5 billion figure was "not a donation," but rather "a negotiated refinancing mechanism."

A source familiar with the situation told Reuters earlier Wednesday Honduras had demanded the funds in aid from Taiwan the day before Honduran President Xiomara Castro tweeted her government would seek to open relations with China.

Honduras is one of only 14 countries to maintain formal diplomatic ties with Taiwan and Beijing has been stepping up efforts to win over Taipei's remaining allies, saying that as a Chinese province, the island has no right to state-to-state ties, which Taiwan strongly disputes.

Early on Thursday, Taiwan said it sees China's involvement in Honduras' decision to end relations with the island as very obvious and the situation does not look good, but it will work hard until the last moment.

'Choking' country

Castro tweeted on March 14 she had instructed the country's foreign minister to bring about the opening of official relations with China, though her government has yet to end ties with Taiwan formally.

The source familiar with the situation confirmed a report by Taiwan's official Central News Agency that on March 13 the Honduran Foreign Minister Eduardo Enrique Reina had written to Taiwan's Foreign Ministry demanding the money.

But the report said that Honduras did not wait for Taiwan's response before Castro sent her tweet.

Reina denied the report, saying Taiwan was told verbally about the offer several times, and that he had sent a note to Taiwan "about a week" before Castro's announcement.

Reina had said last week Honduras' decision was partly because the Central American country was "up to its neck" in financial challenges and debt — including $600 million it owes Taiwan.

Reina told the Reuters news agency on Wednesday that interest rates were very high and "choking" Honduras, and that the proposal was "related to finding a debt financing mechanism for [Taiwan] to buy [Honduran] debt."

Taking lawmaker questions in parliament earlier on Wednesday, Taiwan Deputy Foreign Minister Tien Chung-kwang said the government will not "lightly give up" on trying to keep Honduras and was "still working hard".

'Empty promises'

Since Castro's tweet, Taiwan has repeatedly said Honduras should not believe China's "empty promises" but that Taipei will not engage in chequebook diplomacy with Beijing.

The Central News Agency report said Taiwan's government suspected China was behind Castro's announcement.

Normally when countries break off diplomatic ties with Taiwan, the announcement is swift, with Taiwan maybe only getting an hour or so's notice, diplomatic sources told Reuters.

The Honduras situation, whereby a week since the announcement, the country has still not established relations with China, is very unusual, the sources said, speaking on condition of anonymity as they were not authorised to speak to the media.

Source: Reuters