Grenada reprieve from Taiwan debt repayment could be short-lived
ST GEORGE’S, Grenada, Monday July 9, 2012 – According to reports coming out of Taiwan, the government of that country is supporting the decision by the Export-Import Bank of the Republic of China in Taiwan to appeal a United States court ruling that overturned an earlier order that had allowed it to garnish money being paid to Grenada from external sources.
According to the Associated Press, Paul Summit, a US-based attorney acting on behalf of the Taiwanese bank, said he plans to appeal the recent ruling in which a US court overturned a previous ruling that allowed the Taiwanese bank to claw back some of the roughly US$30 million it says Grenada owes it for loans provided for infrastructure projects.
Taiwan's Ministry of Foreign Affairs spokesman Steve Hsia said said last Friday (July 4) that government respects the Taiwanese bank's handling of a debt dispute with Grenada.
The case centres around a commercial loan dispute between Taiwanese government-owned bank established in 1979 to facilitate export and import trade and the Grenada government, in which, after Grenada switched diplomatic recognition from Taipei to Beijing in 2005, the bank sued the Caribbean nation in New York for the return of loans granted when the two sides were diplomatic allies.
For the last nine months, Taiwan's Export-Import Bank had been siphoning off money owed to Grenada by airlines and cruise ship companies and holding it in an escrow account, but the latest US court ruling "agreed to vacate Taiwan's restraining notices on Grenadian statutory authorities," according to the Associated Press.
Justice Harold Baer of the Southern District Court of New York has now ruled that the Asian country has no right to garnish the overseas earnings of Grenada to win back payments for development loans.
Prior to previous government administration’s switch of allegiance to China, Grenada was one of only 23 countries around the world that had recognised Taiwan as a full sovereign state rather than as a breakaway rebel province of China, as Beijing has long maintained.
However, once China replaced Taiwan as Grenada's economic ally, Taiwan began to demand immediate repayment of its concession loans to the island, even though Grenadian authorities had asked for time to work out a payment plan.
Lawyers for Grenada took the matter to a U.S. court because Taiwan had successfully begun to garnish the island's earnings from cruise lines and air travel, putting the money - nearly US$1 million dollars according to Inter Press Services (IPS) into its own account rather than Grenada's.
This also had implications for Grenada’s cruise industry as, according to IPS, cruise lines were on the verge of scrubbing St. George's as a port of call because they were uncomfortable being in the middle of a nasty diplomatic row that forced them to take the side of one over the other.
In his ruling, Justice Baer called the actions of Taiwan inimical to the island's development since Grenada depends on money from the cruise and airline sectors "as a source of revenue for carrying out public functions".