Paraguay’s President-elect Fernando Lugo, who is slated to take office on Aug. 15, has said many times that he would like to switch diplomatic recognition to China, giving rise to speculations that Taiwan might lose its only diplomatic ally in South America.

Media reports from Paraguay said that Paraguay’s Vice President-elect Federico Franco has requested US$71 million in foreign aid from Taiwan and warned that if the South American country does not receive the funding, it might sever ties with Taiwan before Lugo’s inauguration.

Whether China tries to lure Paraguay away from Taiwan, such as by offering Paraguay money, will be an indication of Beijing’s willingness to call off a longstanding diplomatic tug of-war with the island, Ou told reporters in a press conference. “Judging from the current situation, diplomatic relations with Paraguay can serve as an indicator (of whether China is willing to have a diplomatic truce with Taiwan),” Ou said.

Since President Ma Ying-jeou took office on May 20, he has sought an end to diplomatic competition with China, in which both sides competed for recognition by giving large sums of money to poor countries desperate for funds, in a practice critics called checkbook diplomacy.

Ou said it won’t be long before Taiwan learns of Beijing’s intentions, referring to Lugo’s inauguration ceremony next month.

Rebutting reports that diplomatic relations with Paraguay are at risk, Ou said that the foreign ministry is discussing new cooperation and aid projects with the incoming government.

“The atmosphere of bilateral talks on cooperation is very nice,” he said.

As to whether President Ma Ying-jeou will attend Lugo’s inauguration ceremony, Ou said the foreign ministry is still waiting for the president to decide.

“The foreign ministry is undergoing related planning should President Ma decide to pay a state visit,” he said. “We have all the detailed plans and will put them into practice as soon as the president decides to go.”

Noting that the other diplomatic ally of Taiwan, the Dominican Republic, will also hold the inauguration ceremony for President-elect Leonel Fernandez on Aug. 16, some analysts believe that going to the two inaugurations will be a good opportunity for President Ma to cement diplomatic ties with Paraguay and the Caribbean country.

If Ma decides to lead Taiwan’s delegation to the two countries in August, the trip will be his first state visit after taking office on May 20.

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