Taipei’s debt hardball carries a clear warning for its remaining allies

In contemporary discourse, the bogeyman of “debt traps” is almost exclusively tied to Beijing. Western media, think tanks, NGOs and policymakers from Washington to Brussels frequently warn developing nations of the perils of bilateral loans from China. Yet, Grenada’s debt dispute from a decade ago and St Vincent and the Grenadines’ (SVG) current troubles offer a starkly different, and often ignored, counter-narrative: the weaponisation of debt by Taiwan.For years, Grenada has grappled with profound economic troubles. Following Hurricane Ivan in 2004, which decimated the country, the Grenadian government made a strategic decision to shift diplomatic recognition from Taiwan to China in 2005. Then with a population of slightly more than 100,000, its economy worsened when it was hit by another hurricane in 2005.Today, Taiwan is recognised by only 12 states, with four of them – Haiti, Saint Kitts and Nevis, Saint Lucia and SVG – in the Caribbean.