The role of dollar diplomacy in China-Taiwan diplomatic competition in the Caribbean and Central America

China and Taiwan have a significant impact on the nations of the Caribbean and Central America. This study shows that both governments have used dollar diplomacy to rent recognition from economically fragile nations in the region, thus treating sovereignty as a resource to be fought over in their competition for diplomatic ties. To develop this argument, the paper analyzes regional Sino-Taiwanese diplomatic rivalry by first clarifying what the term dollar diplomacy means, setting it in its historical and contemporary foreign policy contexts, and then analyzing motivations, techniques and results of dollar diplomacy in thirteen countries in the region. Dollar diplomacy is the most extreme and competitive form of the economic-based foreign policies of Beijing and Taipei. The paper concludes with an explanation for the current Taiwan-China diplomatic truce in 2009, but shows that pressures still exist for re-intensified rivalry and for dollar diplomacy to resume.